Chairman’s Address & CEO Report to Shareholders

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3 November 2022


ASX Market Announcements Office
ASX Limited
20 Bridge Street
Sydney NSW 2000


Dear Sir/Madam

RE: Downer EDI Limited 2022 Annual General Meeting

Please find attached a copy of the following documents related to the Annual General Meeting of
Downer EDI Limited to be held at 11:00am today:
• Chairman’s address to shareholders;
• Chief Executive Officer’s report; and
• Slide presentation for the meeting.

Yours sincerely,
Downer EDI Limited

Robert Regan
Company Secretary

Authorised for release by Downer’s Group General Counsel and Company Secretary, Robert Regan.




Downer EDI Limited
ABN 97 003 872 848
Triniti Business Campus
39 Delhi Road
North Ryde NSW 2113
1800 DOWNER
www.Downergroup.com

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DOWNER GROUP ANNUAL GENERAL MEETING 2022
CHAIRMAN’S ADDRESS AND CHIEF EXECUTIVE OFFICER’S REPORT

Chairman’s Address, Mark Chellew

Ladies and gentlemen,

The 2022 financial year was extremely challenging for Downer.

The widespread impact of COVID-19 within the community, and the restrictions placed on
businesses and employees by government to stop the spread of infection, were not anticipated at
the time we set our targets and forecasts for 2022. Additionally, the prolonged and severe wet
weather patterns experienced throughout Australia’s eastern States have been debilitating and
unprecedented.

The impact of COVID-19 and severe wet weather materially impacted Downer’s financial
performance in 2022.

Notwithstanding the challenges presented throughout the year, our staff and management
responded outstandingly in difficult circumstances, delivering exceptional results for our customers
and maximising outcomes for shareholders.

For the 2022 financial year, the Board assessed the impact of COVID-19 and severe wet weather
on Executive performance KPIs and formed the view that, if not for these impacts, the Executive
was likely to achieve above target earnings performance in 2022. After extensive deliberation of
these issues and the Company’s financial and non-financial performance, the Board determined it
important and appropriate to exercise discretion and award a Short-Term Incentive outcome of
65% for the Executives, which is between threshold and target. The Board balanced the
challenging environment for shareholders and the strong competition for talent and retention
across Australia and New Zealand, which is unparalleled in recent years.

We accept that some shareholders do not agree with all of the Board’s remuneration decisions this
year. The Board has been working actively over many years to ensure that Executive pay is
appropriate. The unprecedented and unanticipated events of FY22 made assessing Executive
performance more difficult than usual. We have engaged with shareholders and proxy advisors
and acknowledge that there is a difference of opinion on this matter. We will continue to act in the
best interests of the Company to deliver the right outcomes.

Ladies and gentlemen, Downer remains leaders in the markets in which we operate, strengthening
our position over the past 12 months with $36.1 billion work-in-hand.

The past year has seen a pronounced acceleration in the push to decarbonise the economy – and
this will create a solid pipeline of opportunities for Downer. Following the 26th United Nations
Climate Change Conference of the Parties in late 2021, our customer base has either committed to
decarbonising their operations or increased the ambition of their existing commitments. As the
world shifts towards a net zero future, Downer is uniquely positioned with its skills, experience and
technical capabilities to support society with this transformative change. This will create significant
growth opportunities for the Company.

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Importantly, Downer’s focus on our Urban Services businesses resulted in a 26 per cent reduction
in our Scope 1 and 2 Greenhouse Gas emissions in FY22.

Downer continues to improve our sustainability performance and reporting, which is reflected in
continued improvement in our external ratings. If you haven’t already done so, I encourage you all
to read our 2022 Sustainability Report, which is available on the Downer Group website, and we
also have copies here today for those joining us in-person. The report provides a comprehensive
overview of our sustainability performance and initiatives.

Many of the activities that Downer’s people perform every day have potential risks, and ensuring
they remain safe is of paramount importance. Downer’s Lost Time Injury Frequency Rate for FY22
was 0.82 and the Total Recordable Injury Frequency Rate was 2.35. While Downer has a history of
strong safety performance, we believe that any injury is unacceptable and we are determined to
continue learning and improving.

A key element of Downer’s Zero Harm strategy is a commitment to support the mental health of
our people and communities. Downer is an industry leader in this space, and our accredited Mental
Health First Aid program continues to arm our people with the knowledge to support their own
mental health, and also look out for their friends and families. We also renewed our successful
partnership with Beyond Blue this year, while in New Zealand we established a new partnership
with the Mental Health Foundation.

Ladies and gentlemen, in my inaugural Chairman’s address at last year’s Annual General Meeting,
I committed to continuing the process of Board renewal at Downer, and we have made progress in
this area over the past year.

During the year, Phil Garling retired from the Board, having made a valuable contribution to
Downer over more than a decade. Downer also appointed three new Non-executive Directors this
year. On 1 March 2022, Mark Binns and Mark Menhinnitt joined the Downer Board, while Adelle
Howse joined on 1 April. These appointments were made following careful consideration of the
skills and experience required on our Board to ensure Downer’s corporate governance remains
robust. I will speak more about all three new Directors later in the meeting, at Item 2 on the
agenda, when we cover their election to the Board.

Downer also took a number of important steps this year to further strengthen our governance
processes and tighten our project and contract delivery management systems. Significant work has
gone into The Downer Standard, our Integrated Management System which gives the organisation
a single governance framework focusing on consistent and repeatable outcomes for our
customers.

Pleasingly, Downer reaffirmed our commitment to community support this year by establishing a
range of new partnerships with not-for-profit organisations. In March, we launched Downer’s first
workplace giving program, to support four strategically-selected charities – the Australian Cancer
Research Foundation, Greening Australia, TLC for Kids, and The Salvation Army’s Family Violence
Stream. Downer will match our employees’ donations up to $250,000 and will also encourage our
people to undertake volunteering opportunities to provide additional support to our charity partners.
In addition to our long-running partnership with the Australian Literacy and Numeracy Foundation,
Downer also established new charitable partnerships with two Indigenous organisations – The

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Stars Foundation and NRL Cowboys House – to support the education of young Indigenous
people.

Ladies and gentlemen, Downer has a portfolio of outstanding assets. We believe the value of these
businesses is not fully reflected in our current share price. We will explore strategies to realise this
value for our shareholders, and we will target making further comment during 2023.

FY22 was a challenging year for Downer – and unfortunately, the lingering effects of COVID-19, as
well as labour shortages and wet weather have continued into FY23. However, just as our staff and
management responded impressively throughout FY22, I have every confidence that they will
continue to overcome these challenges and deliver excellent outcomes for our customers and
shareholders.

I would like to thank Grant and his Executive team, and our people, for their efforts over the past
12 months. I would also like to thank our shareholders for your support this year. I will now hand
over to Grant, before I return to run through the resolutions that will be put through to the meeting.

Thank you.

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Chief Executive Officer’s Report, Grant Fenn

Thank you, Chairman.

The financial year 2022 was challenging for Downer. Early on, we were confronted with the Delta
and Omicron versions of COVID-19, leading to lockdowns across Australia and New Zealand,
disrupting workflows, labour availability and supply chains for extended periods. And we were
impacted by severe weather, particularly over the last eight months of the year.

I would like to take this opportunity to acknowledge and thank our people, throughout the business,
for continuing to deliver outstanding service for our customers in the most difficult of times.

Revenue for our Urban Services was actually up 10.8% to $11.5 billion, but our underlying EBITA
was down 3% with the productivity and cost impact of COVID-19 and bad weather.

Our cashflow performance was good, with underlying cash conversion at 89% and the Board
declared a final dividend of $0.12 per share, taking the full year dividend payout to 24 cents.

Our sustainability reporting and performance continued to improve, as have our external ratings.
Importantly, we reduced our Scope 1 and 2 Greenhouse Gas emissions by 26%.

We continued to focus on and invest in our people. We launched our THRIVE program focused on
female leadership development, providing opportunity for females in our organisation to develop
new skills and build a network of colleagues across the Group, and the results so far have been
very encouraging.

And we’ve made great progress in embedding our quality system, The Downer Standard. Having
consistent and effective standards across the delivery aspects of our business is crucial to project
performance and higher margins.

Downer is highly levered to the energy transition currently underway. A net zero future will require
adjustments to almost all urban infrastructure. The amount of money to be spent on the transition
is huge and Downer is right in the middle of it, with capabilities across our portfolio that are in high
demand.

One of Downer’s major technical capabilities is in power. We’re the market leader in design and
construction of power transmission and distribution networks, and a market leader in renewable
generation. With our suite of technical skills, we’re in a prime position to grow our business in what
will be a massive transformation effort. And this is already happening. We’re at our customers’
sites. We know their assets. And we’re already working with many of them to produce their own
renewable power, and reduce their energy consumption and emissions.

On the operational side: our Road Services business was the most heavily impacted by severe
weather throughout FY22 and this has continued into the first quarter of FY2023. But on the
positive side, we will see strong demand for recovery work when the rain and floods stop. During
the year, we opened the new Sustainable Resource Recovery Centre at Rosehill, Sydney – a
fantastic facility with capacity to produce 550,000 tonnes of high recycle content asphalt each year.
It will lead the market in quality, emissions and efficiency.

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We lead the road maintenance industry in the use of recycled materials and we’re increasing our
investment in R&D to produce lower emissions products and low energy manufacturing processes.
The products we’re creating and the way we produce them will ultimately lead to large reductions
in State and Local Government emissions.

In our Rail and Transit Systems business, we submitted our bid for the next generation of
Queensland trains. If successful, this will materially increase our rail EBIT contribution through to
2031 and cement our position as the largest passenger rollingstock maintainer in Australia and
New Zealand for the next 30 years.

In May, our Utilities business entered the New Zealand transmission market for the first time with a
five-year service contract with Transpower. This will be the foundation contract for expansion of our
broad power capabilities in New Zealand. And we successfully completed the design and
installation of 46 megawatts of solar generation across 550 Queensland schools, contributing to
$26 million in annual power savings.

Our communications business had a strong year. In wireless networks, we added NBN to existing
customers Telstra and Optus to be the industry leader in network deployment nationally. We
secured the major three-year Field Service Agreement with Chorus in New Zealand. We became
the largest supplier to NBN for on-demand business grade and residential services in all mainland
States of Australia.

On the Facilities side, we successfully renegotiated the Royal Adelaide and Bendigo hospital
contracts, both for an additional five-year term with better rates and terms and conditions. We were
successful in four key contract extensions for Vic Schools, WA Housing, Land and Housing and
Whole of Government in New South Wales. Pleasingly, we’ve supported the Lismore and Casino
communities in flood remediation work.

In our Defence business we delivered more than 300 upgrade and refurbishment projects across
the Defence estate. We’ve been awarded the major airfield upgrade project at RAAF Williamtown
and we’ve secured the managing contractor role on the Riverina Development Program, managing
five major base redevelopments.

And finally, as industry leaders in power generation, we have established the Downer Future
Energy Team, focusing on new technologies and alternate fuels, providing thought leadership with
our customers in the energy transition. We’ve successfully delivered a large suite of
decarbonisation projects for Santos and we’ve signed a multi-year agreement with AGL for power
station shutdowns, maintenance and projects. We’ve modernised our Kalgoorlie workshop to
increase capacity and capability to meet the future demands of nickel, lithium and base metal
customers in WA.

As you can see, we’ve been busy.

Our work-in-hand is a substantial $36.1 billion. It’s diversified by market and service type. It’s 90%
government or government-related. And we are seeing an increase in more collaborative risk
sharing contract models, increasing Downer’s addressable market.

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Labour availability is currently a challenge for the Group as it is for the whole economy. Job
vacancies are up, particularly in our Facilities and Utilities businesses. As a result, our cost to
serve is currently elevated.

Employee attraction and retention is one of our highest priorities. We’re actively engaged in
international recruitment and we have a series of programs to enhance our success rate. We focus
on programs and initiatives that foster a positive work culture, enhancing our employee experience
and reinforcing Downer’s reputation as an employer of choice.

Now, just touching on trading in the first quarter of FY23.

In August, we said that we expected 10 – 20% growth in our underlying FY23 NPATA, assuming
no material COVID-19, weather, labour or other disruptions.

I guess it’s no shock to highlight the difficult weather conditions that have plagued the past four
months, particularly in the eastern States and New Zealand. It has been very difficult to get a good
run at the extensive amount of work to be delivered across the Group. Very few of our businesses
have been unaffected.

It’s too early to predict what the weather has in store for us for the remainder of the year and
consequently what the impact might be on the Full Year. We hope it improves but time will tell. The
irony is that these weather conditions drive significant increases in future demand for our services,
boding well for when we get some reasonable weather.

As it stands today, our forecasts continue to support our guidance and we will provide a further
update at our Half Year results in February 2023.

Finally, as Mark mentioned in the Chairman’s Address, Downer has a portfolio of outstanding
assets. We believe the value of these businesses is not fully reflected in our current share price.
We will explore strategies to realise this value for our shareholders, and we will target making
further comment during 2023.

I would again like to thank our people, right across the Group, for their massive contribution in
financial year 2022, and also to thank you, our shareholders, for your continued support.

I now hand the meeting back to our Chairman.

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2

4
Mark Chellew
Chairman

5
Grant Fenn
Managing Director and Chief Executive Officer

Trading update and Group outlook
6
Guidance issued in August 2022: “For FY23, Downer expects 10-20% underlying NPATA growth,
assuming no material COVID-19, weather, labour or other disruptions”.
Trading conditions in Q1 were more challenging than anticipated, primarily due to the continued wet
weather and flooding events down the Australian East Coast, as well as the continued elevated costs to
serve associated with the labourmarket.
Downer remains in the previously communicated guidance range, assuming no further material
COVID-19, weather, labour or other disruptions.
Market position, pipeline and demand for our services remains very strong.
Downer has a portfolio of outstanding assets. We believe the value of these businesses is not fully
reflected in our current share price. We will explore strategies to realise this value for our shareholders,
and we will target making further comment during 2023.

7
Mark Chellew
Chairman

8
Robert Regan
Company Secretary

Item 1: Financial Report,
Directors’ Report and IndependentAuditor’s Report
The Financial Report, Directors’ Report and the Independent Auditor’s Report are now open for
discussion.
There is no requirement for shareholders to approve these reports. Accordingly, item number one is for
discussion only and there will not be a vote on this item.
I remind you that only shareholders of the company or their duly appointed representatives or proxies are
permitted to ask questions.
If you do have a question, please raise your hand and we will bring a microphone to you.
9

Item 2a: Election of Mark Binns
10

Item 2a: Election of Mark Binns
“That Mark Binns who was appointed as an Independent Non-executive Director of the Company, effective
1 March 2022, in accordance with Rule 3.3 of the Company’s Constitution and being eligible, is elected as a
Non-executive Director of Downer.”
Proxies received in relation to this motion are displayed on the screen.
11
Vote d% % of all shares
For533,433,91699.4679.39
Against2,178,8450.400.32
Abstain115,689n/a0.02
Open – Useable749,7930.140.11

Item 2b: Election of Dr Adelle Howse
12

Item 2b: Election of Dr Adelle Howse
“That Dr Adelle Howsewho was appointed as an Independent Non-executive Director of the Company,
effective 1 April 2022, in accordance with Rule 3.3 of the Company’s Constitution and being eligible, is
elected as a Non-executive Director of Downer.”
Proxies received in relation to this motion are displayed on the screen.
13
Vote d% % of all shares
For535,244,93999.7979.66
Against370,4500.070.06
Abstain100,296n/a0.01
Open – Useable762,5580.140.11

Item 2c: Election of Mark Menhinnitt
14

Item 2c: Election of Mark Menhinnitt
“That Mark Menhinnittwho was appointed as an Independent Non-executive Director of the Company,
effective 1 March 2022, in accordance with Rule 3.3 of the Company’s Constitution and being eligible, is
elected as a Non-executive Director of Downer.”
Proxies received in relation to this motion are displayed on the screen.
15
Vote d% % of all shares
For533,238,22099.4279.36
Against2,373,5380.440.35
Abstain112,930n/a0.02
Open – Useable753,5550.140.11

Item 2d: Re-election of Teresa Handicott
16

Item 2d: Re-election of Teresa Handicott
“That Teresa Handicott, who was appointed as an Independent Non-executive Director of the Company on
21 September 2016 and in accordance with Rule 3.6 of the Company’s Constitution and being eligible, offers
herself for re-election, is re-elected as a Non-executive Director of Downer.”
Proxies received in relation to this motion are displayed on the screen.
17
Vote d% % of all shares
For522,637,63697.4477.78
Against12,908,4052.401.92
Abstain84,910n/a0.01
Open – Useable847,2920.160.13

Item 2e: Re-election of Peter Watson
18

Item 2e: Re-election of Peter Watson
“That Peter Watson, who was appointed as an Independent Non-executive Director of the Company on
22 May 2019 and in accordance with Rule 3.6 of the Company’s Constitution and being eligible, offers
himself for re-election, is re-elected as a Non-executive Director of Downer.”
Proxies received in relation to this motion are displayed on the screen.
19
Vote d% % of all shares
For530,589,91798.9378.97
Against5,030,1110.930.75
Abstain107,757n/a0.02
Open – Useable750,4580.140.11

Item 3: Adoption of Remuneration Report
“That the Remuneration Report for the year ended 30 June 2022 be adopted.”
Proxies received in relation to this item are displayed on the screen.
20
Vote d% % of all shares
For236,477,00544.1035.19
Against298,986,27155.7644.50
Abstain280,576n/a0.04
Open – Useable712,2910.140.11

Item 4: Approval of Managing Director’s LTI
“That approval is given to the grant of performance rights pursuant to the Company’s LTI Plan and the
acquisition of shares on vesting by issue or by transfer as the Managing Director’s long-term incentive for
2023 on the basis described in the Explanatory Memorandum to this Notice of Meeting.”
Proxies received in relation to this item are displayed on the screen.
21
Vote d% % of all shares
For532,738,65999.3279.28
Against2,882,8950.540.43
Abstain141,121n/a0.02
Open – Useable715,5680.140.11

Item 5: Renewal of proportional takeover approval provisions
“That the Company modify its constitution by renewing clause 37 which contains proportional takeover
approval provisions for the purposes of section 648D of the Corporations Act 2001 (Cth), with effect from the
close of the meeting.”
Proxies received in relation to this item are displayed on the screen.
22
Vote d% % of all shares
For530,285,03998.8778.92
Against5,291,3250.990.79
Abstain142,779n/a0.02
Open – Useable759,0900.140.11

Item 6: Increase of Non-executive Director fee limit
“That the maximum total amount of Directors’ fees that may be payable by the Company to the Non-
executive Directors be increased from $2,000,000 per year to $2,400,000 per year, with effect from the
financial year commenced 1 July 2022.”
Proxies received in relation to this item are displayed on the screen.
23
Vote d% % of all shares
For532,499,29299.2879.25
Against3,112,0760.580.46
Abstain142,163n/a0.02
Open – Useable724,7120.140.11

24
Mark Chellew
Chairman

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