1. Details of reporting period Half year ended 31 December Revenue from ordinary activities Down 0.15% to $639.5 million

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1 21 February 2012 The Manager Company Announcements Office 10th Floor 20 Bond Street SYDNEY NSW 2001 Dear Sir, Results for announcement to the market Watpac Limited 31 December 2011 Appendix 4D 1. Details of reporting period Half year ended 31 December Key Items 2.1 Revenue from ordinary activities Down 0.15% to $639.5 million 2.2 Profit from ordinary activities after tax Up 14.72% to $4.9 million attributable to members 2.3 Profit for the period after tax attributable Up 14.72% to $4.9 million to members 2.4 Interim dividend amount per security 1.5 cents Franked amount per security 100% Conduit foreign income Nil 2.5 Record date for determining dividend 29 February 2012 entitlements 3. Net tangible assets per security $1.48 per share (30 June 2011: $1.50 per share) 4. Details of entities over which control has Nil been gained or lost 5. Total dividend distribution $2,765,738, calculated on number of shares currently on issue Dividend distribution date 14 March Dividend reinvestment plan The Watpac Limited Dividend Reinvestment Plan has been suspended while the on-market share buy-back is in place 7. Details of associates and joint ventures No changes from the 30 June 2011 financial statements 8. Any other significant information Refer 31 December 2011 Interim Financial Report 9. Foreign entities N/A Page 1 of 2

2 10. Auditor Review The financial statements have been reviewed and are not the subject of dispute or qualification. 11. Comparison of result to previous On 13 December 2011 the Directors provided FY12 earnings corresponding period guidance indicating that the 31 December 2011 half year result was not expected to be materially different to the previous corresponding period. At a Board meeting held on 21 February 2012, the Directors assessed a number of estimates used in the compilation of the draft results presented to them at that meeting. This assessment included an evaluation of subsequent events. After due consideration of a number of items, the Board agreed the Group s net profit after tax for the period, which was above expectations and 14.72% above the previous corresponding period. This information has been immediately released to the market in accordance with the ASX Listing Rules. Yours sincerely, WATPAC LIMITED Mark Baker COMPANY SECRETARY Page 2 of 2

3 Watpac Limited 31 December 2011 Interim Financial Report

4 Contents Page Directors Report 2 Lead Auditor s Independence Declaration 5 Consolidated Income Statement 6 Consolidated Statement of Comprehensive Income 7 Consolidated Balance Sheet 8 Consolidated Statement of Changes in Equity 9 Consolidated Statement of Cash Flows 10 Condensed Notes to the Consolidated Financial Statements 11 Directors Declaration 15 Independent Auditor s Review Report 16 1 of 16

5 Directors Report The Directors present their report, together with the consolidated financial report of Watpac Limited ( Watpac or Company ) and its consolidated entities ( Group ) for the half year ended 31 December 2011 and the Auditor s review report thereon. Directors The Directors of the Company (the Board ) at any time during or since the end of the half-year are: Name Period of directorship Non-executive Mr Kevin W Seymour (Chairman) Director since 1996 Mr Richard B McGruther (Deputy Chairman) Director since 1993 Mr Robert J Lette Director since 1996 Mr David M Little Director since 1985 Mr Kevin A Mooney Director since 2011 Mr Chris R Freeman Director since 2011 Executive Mr Gregory K Kempton (Managing Director) Director since 2002 Review of operations The Group recorded a profit after tax of $4,893k for the half year ended 31 December 2011 (2010: $4,265k). This represents an improvement on the previous corresponding period and reaffirms the FY12 earnings guidance provided by the Directors in December 2011, where it was advised that the full year underlying operating net profit after tax for the Group is anticipated to be an improvement of at least 20% on the prior year. A review of the results recorded for each reporting segment in the Group for the half year is included below. Contracting The Contracting segment, which includes results from the Group s Construction and Specialty Services businesses, reported a pre-tax profit for the half year of $14,773k (2010: $26,690k). While a decrease on the previous corresponding period, the result represents a sound result for the half. A number of projects, especially in New South Wales, are expected to contribute significantly enhanced profit in line with their construction programs in the second half of FY12. As such, the comparative reduction in profitability of the segment in the first half is expected to reverse over the course of the full financial year. Despite increasing competition and tightening margins, the division has a strong forward order book and continues to identify and participate in a number of tendering activities, which are expected to contribute positively to earnings in future periods. As reported at 30 June 2011, the composition of the Construction business s forward order book is now reasonably well spread, both in terms of product type and geographical location. The enhanced capability and capacity of the New South Wales, Victorian and South Australian businesses now complement the proven track record of delivery in Queensland. While the contracting market is anticipated to remain tight over the short-term, Watpac s geographically diversified construction operations are expected to contribute future growth opportunities for the Group. Civil & Mining The Civil & Mining segment reported a pre-tax profit for the half year of $3,223k (2010: $7,088k loss). This result represents a significant turnaround in profitability from that recorded in the first half of the 2011 financial year. As has been previously reported, the Civil & Mining division recorded significant losses across a number of flood affected projects in FY11, a large component of which was recognised in the first half of that financial year. Notwithstanding these abnormal items in the prior year result, the profit delivered by the Civil & Mining business in the first half of FY12 represents a positive turnaround in underlying trading performance. 2 of 16

6 Directors Report The growth in the Civil & Mining business over the past two years has been significant. While the Board are focussed on ensuring the Group takes advantage of future earnings potential in this sector, the Directors are also conscious that the Civil & Mining business must grow at a measured level, consistent with the Group s capital allocation strategy and the enhancement in back office support systems and processes. Property The Property segment recorded a pre-tax loss of $3,847k for the half year (2010: $7,086k loss). This improvement from the comparative period directly reflects reduced holding costs, which is a result of debt reduction achieved from the asset sales program undertaken in the 2011 financial year. Over $100,000k in debt was repaid on development projects from property sales which occurred in FY11, thus financing costs are significantly less in the first half of FY12 compared to the previous corresponding period. Once again the Directors have elected to adopt a conservative accounting approach and write off all holding costs capitalised into development inventory during the period on projects not in the development phase. The total value of holding costs which have been written off during the half year is $3,048k (2010: $6,312k) and represents the majority of the pre-tax loss recorded by the division for the half year. The Rue de Chapel property development project in Chapel Street, Melbourne, comprising residential and retail components, is currently under construction and is expected to be completed in the first half of FY13. As such under the current accounting rules, this project, the residential component of which is 100% pre-sold, will not contribute to the Group s result in FY12. Active marketing campaigns are currently underway on the Luxton Apartments (Melbourne) and Addison Quays (Brisbane) projects. Should appropriate pre-sales levels be attained, construction on these projects will commence in FY13. Capital Management and Liquidity The Group s cash position remains strong, with $118,441k in cash on hand at 31 December Notwithstanding $31,500k in property debt was repaid in July 2011 from asset sales which settled in FY11, total cash reserves increased by $3,746k during the half year. During the past six months, Watpac has also successfully negotiated equipment finance facility extensions totalling $30,000k. These enhanced funding lines allow the Group more flexibility in growing its businesses, and the ability to appropriately allocate debt and equity capital between the competing interests of real property and plant. On 13 December 2011, the Board announced its intention to conduct an on-market buy-back within the 10/12 limit. At that time, the Directors believed the company s shares were undervalued, and the market capitalisation had fallen below what was deemed to be a fair representation of the value of the Group. Surplus liquidity has therefore been allocated to undertake this buy-back initiative and ensure the value attributable to existing shareholders is adequately protected. The buy-back permits the Company to purchase up to 18,334,138 shares in Watpac over the next 12 months. As at the date of this report, 778,447 shares had been purchased under the on-market buy-back program. Dividend On 21 February 2012, the Directors declared a fully franked interim dividend in relation to the 2012 financial year of 1.5 cents per ordinary share. The Watpac Limited Dividend Reinvestment Plan has been suspended while the onmarket buy-back is in place. Lead auditor s independence declaration The lead auditor s independence declaration is set out on page 5 and forms part of the directors report for the half year ended 31 December of 16

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8 ABCD Lead Auditor s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Watpac Limited I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2011 there have been: no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and no contraventions of any applicable code of professional conduct in relation to the review. KPMG Jason Adams Partner Brisbane, 21 February of 16 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.

9 Consolidated Income Statement For the six months ended 31 December 2011 Note Revenue 639, ,462 Cost of sales (595,098) (599,823) Gross profit 44,426 40,639 Property asset income 2,708 4,223 Property asset expenses (1,172) (1,788) Other income Write-down of property development inventory 7 (3,048) (6,312) Divisional administrative expenses (26,720) (24,132) Corporate administrative expenses (6,231) (5,609) Results from operating activities 10,039 7,228 Finance income 8 2,171 3,345 Finance expense 8 (5,686) (4,886) Net finance costs (3,515) (1,541) Profit before tax 6,524 5,687 Income tax expense 5 (1,631) (1,422) Profit for the period attributable to equity holders of the parent 4,893 4,265 Earnings per share Basic earnings per share attributable to ordinary equity holders Diluted earnings per share attributable to ordinary equity holders of 16

10 Consolidated Statement of Comprehensive Income For the six months ended 31 December Profit for the period attributable to equity holders of the parent 4,893 4,265 Other comprehensive income: Effective portion of changes in fair value of cash flow hedge Net change in fair value of available-for-sale financial assets Other comprehensive income for the period, net of tax Total comprehensive income for the period 5,026 4,982 7 of 16

11 Consolidated Balance Sheet As at 31 December 2011 Note 31 Dec Jun 11 ASSETS Current assets Cash and cash equivalents 118, ,695 Trade and other receivables 73,354 77,122 Inventories 7 174, ,554 Loan to associate 5,706 - Current tax receivable 2,378 - Total current assets 373, ,371 Non-current assets Inventories 7 206, ,517 Property, plant and equipment 138, ,537 Intangibles 27,698 27,698 Loan to associate - 5,706 Deferred tax assets 6,804 5,856 Financial derivative asset Total non-current assets 379, ,395 Total assets 753, ,766 LIABILITIES Current liabilities Trade and other payables 249, ,519 Interest-bearing loans and borrowings 36,580 60,364 Current tax payable - 1,384 Employee benefits 12,347 11,157 Total current liabilities 298, ,424 Non-current liabilities Trade and other payables 9,278 3,559 Interest-bearing loans and borrowings 140, ,896 Employee benefits 2,612 2,959 Provisions Total non-current liabilities 153, ,879 Total liabilities 452, ,303 Net assets 301, ,463 EQUITY Issued capital 236, ,190 Reserves 8,007 7,874 Retained earnings 57,024 60,399 Total equity 301, ,463 8 of 16

12 Consolidated Statement of Changes in Equity For the six months ended 31 December 2011 In thousands of AUD 31 December December 2010 Share capital Share options reserve Hedging reserve Available for sale reserve Retained earnings Total Share capital Share options reserve Hedging reserve Available for sale reserve Retained earnings Balance at 1 July 234,190 8,382 (508) - 60, , ,944 8,382 (504) , ,623 Total comprehensive income for the period Profit or loss ,893 4, ,265 4,265 Other comprehensive income Effective portion of changes in fair value of cash flow hedge Net change in value of available-for-sale financial assets Total other comprehensive income Total comprehensive income for the period ,893 5, ,265 4,982 Total Transactions with owners recorded directly in equity Contribution by and distribution to owners Dividends to equity holders (8,268) (8,268) (11,786) (11,786) Change in fair value of shares issued as consideration (984) (984) Shares issued under dividend reinvestment plan 1, ,832 2, ,712 Total contributions by and distributions to owners 1, (8,268) (6,436) 1, (11,786) (10,058) Total transactions with owners 1, (8,268) (6,436) 1, (11,786) (10,058) Balance at 31 December 236,022 8,382 (375) - 57, , ,672 8,382 (367) 1,271 50, ,547 9 of 16

13 Consolidated Statement of Cash Flows For the six months ended 31 December 2011 Cash flows from operating activities Note Cash receipts from customers 716, ,026 Cash paid to suppliers and employees (654,883) (643,085) Cash generated from operations 61,375 12,941 Interest received 2,279 3,345 Interest paid (7,841) (9,431) Income taxes refunded/(paid) (6,341) 634 Net cash provided by operating activities 49,472 7,489 Cash flows from investing activities Dividends received Acquisition of property, plant and equipment (8,375) (20,211) Proceeds from sale of property, plant and equipment Proceeds from sale of investments - 6 Additional consideration paid for business acquisition - (984) Net cash used in investing activities (8,280) (20,516) Cash flows from financing activities Proceeds from borrowings 11,153 38,442 Repayment of borrowings (31,858) (26,701) Repayment of finance leases (10,307) (5,686) Dividends paid (6,434) (9,074) Net cash from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 31 December (37,446) (3,019) 3,746 (16,046) 114, , , , of 16

14 Condensed notes to the Consolidated Financial Statements 1. Reporting entity Watpac Limited ( Watpac or Company ) is a company domiciled in Australia. The consolidated interim financial report of the Company as at and for the six months ended 31 December 2011 comprises the Company and its subsidiaries (together referred to as the Group ) and the Group s interests in associates and jointly controlled entities. The consolidated annual financial report of the Group as at and for the year ended 30 June 2011 is available upon request from the Company s registered office at Level 1, 12 Commercial Road, Newstead, QLD 4006 or at 2. Statement of compliance These consolidated interim financial statements have been prepared in accordance with AASB 134 Interim Financial Reporting. They do not include all of the information required for the full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June These consolidated interim financial statements were approved by the Board of Directors on 21 February Significant accounting policies With the exception of a change to the Group s reportable segments (refer note 6), the accounting policies applied by the Group in this consolidated interim financial report are the same as those applied in its consolidated financial report as at and for the year ended 30 June Estimates The preparation of the interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. In preparing this consolidated interim financial report, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 30 June Income tax expense The Group s effective tax rate in respect of continuing operations for the six months ended 31 December 2011 is 25% (for the six months ended 31 December 2010: 25%). This tax rate is consistent with management s estimate of the effective tax rate that will be applicable for the full year to 30 June 2012 as it reflects taxation benefits expected to arise to the Group in the current year as a consequence of participating in the Research and Development ( R&D ) tax concession regime. The Group generates additional tax deductions in respect of costs it incurs on projects where significant levels of design and building innovation are delivered. 6. Operating segments The Group s operating segments are based on the information that is provided to the Managing Director, the chief operating decision maker. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. An operating segment s results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. Discrete financial information relating to each of the Group s operating segments is reported to the Board on a regular basis. 11 of 16

15 Condensed notes to the Consolidated Financial Statements 6. Operating segments (continued) Reportable segments are based on aggregated operating segments determined by the similarity of products sold and /or services provided, as these are the sources of the Group s major risks. The Group has three reportable segments, being: Contracting: Building, refurbishment, project management and construction management. Civil & Mining: Civil and contract mining services. Property: Development of commercial, residential, and industrial properties. For the period ended 30 June 2011, two operating segments, being Civil & Mining and Contracting were aggregated into one reportable segment, Construction and Contracting. The aggregation was based on an assessment of the similarities of underlying services provided. Due to the increased size of mining services contracts within the Civil & Mining division, which are delivered in a manner dissimilar to those provided by other operating segments, the Group has changed its segment reporting accounting policy. The Civil & Mining operating segment is now represented as a separate reportable segment within the Group. Comparative results for the 2011 financial year included in the table below have been amended to reflect this change. Information about reportable segments For the six months ended 31 December 2011 In thousands of AUD Contracting Civil & Mining Property Unallocated Elimination Total (restated) (restated) External revenues 447, , , , , (5,719) 13, , ,462 Other material non cash items: Write-down of property development inventory (3,048) (6,312) (3,048) (6,312) Finance income 2,120 3, ,166 1,799 (2,120) (2,273) 2,171 3,345 Finance expense - - (4,105) (1,708) (518) (2,593) (3,183) (2,858) 2,120 2,273 (5,686) (4,886) Reportable segment profit/(loss) before income tax 14,773 26,690 3,223 (7,088) (3,847) (7,086) (7,349) (6,461) (276) (368) 6,524 5, of 16

16 Condensed notes to the Consolidated Financial Statements 7. Write-down of property development inventory The Group s accounting policy is to capitalise interest and holding costs of property development assets for which no significant passive income is being generated. In light of continued difficult market conditions the Group has adopted an approach of writing off all holding costs and interest on properties not in the development phase, as incurred. This has the effect of only increasing the cost base of projects when underlying value is being created. The write-off of interest and holding costs is shown as write-down of property development inventory in the income statement. 8. Finance income and expense 31 Dec Dec 10 Interest income 2,171 3,345 Finance income 2,171 3,345 Interest expense (5,686) (4,886) Finance expense (5,686) (4,886) 13 of 16

17 Condensed notes to the Consolidated Financial Statements 9. Dividends 31 Dec Dec 10 Dividends declared and paid by the Group: 9 September 2011: 4.5 cents per qualifying ordinary share. Fully franked (30 September 2010: 6 cents fully franked) 8,268 11,786 8,268 11,786 Dividends proposed and not yet recognised as a liability: 14 March 2012: 1.5 cents per qualifying ordinary share. Fully franked (30 March 2011: 1.5 cents fully franked) 2,766 2,750 2,766 2, Related parties Arrangements with related parties continue to be in place. For details of these arrangements, refer to the 30 June 2011 annual financial report. 11. Capital commitments 31 Dec Dec 10 Plant and equipment Contracted but not provided for and payable - within one year 13,227 8,017 Property development Contracted but not provided for and payable - within one year 16, Subsequent events For dividends declared after 31 December 2011, refer Note of 16

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19 ABCD Independent auditor s review report to the members of Watpac Limited We have reviewed the accompanying interim financial report of Watpac Limited, which comprises the consolidated balance sheet as at 31 December 2011, the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes 1 to 12 comprising a summary of significant accounting policies and other explanatory information and the directors declaration of the Group comprising the company and the entities it controlled at the half-year s end or from time to time during the half-year. Directors responsibility for the interim financial report The directors of the company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the interim financial report that is free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group s financial position as at 31 December 2011 and its performance for the interim period ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As auditor of Watpac Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Watpac Limited is not in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group s financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations KPMG Jason Adams Partner Brisbane, 21 February of 16 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.