Watpac Limited

2015 Full Year Results Presentation

25 August 2015

FY15 highlights Strong Contracting performance & healthy balance sheet in place

Overview Enhanced performance of the Group’s Contracting segment consistent with improved market conditions

and targeted approach to tendering Reduction in financial performance of Mining & Civil segment reflective of current state of resources

sector and impact of falling commodity prices Underlying results resilient, reflecting diversification of earnings base

Financial performance Statutory Net Profit Before Tax of $15.5M, Net Profit After Tax of $11.5M

• Property developments inventory assets impaired by $9.1M (pre-tax) Underlying Net Profit Before Tax of $24.6M, Underlying Net Profit After Tax of $17.9M

• FY15 Underlying Net Profit After Tax in line with market guidance

Capital management initiatives Strong balance sheet, with net cash position of $151M $113M in net available liquidity after adjusting for advance billings Alternate uses of surplus capital were considered

• On-market share buy-back considered the most efficient mechanism • Share buy-back announced and to commence in September 2015 – EPS accretive

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FY15 highlights (cont’d)

Quality of workbook in Contracting to drive future growth

Contracting segment delivering solid results driven by improvement in the construction market – solid pipeline in place with a number of recent contract wins

• $55M contract to build facility for Reserve Bank of Australia • $70M contract to build the Central Adelaide residential development • $78M contract to build two hotels & a conference centre at Brisbane airport • $126M contract to build mixed use development in Sydney

Reducing investment in Mining & Civil which continues to be subdued by tough market conditions

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Divestment of property portfolio continues • Final tranche settlement of Waterloo

property to provide $12M in FY16 ($28M including deposits received to date)

Residual property assets written down by $9.1M

76.6%

23.4%

FY15 operating revenue by segment

Contracting

Mining & Civil

Financials

Underlying results broadly in line with FY14 $M FY15

Statutory FY15

Significant items

FY15 Underlying

FY14 Statutory

FY14 Significant

items

FY14 Underlying

Change FY15 v FY14 Underlying

Revenue Turnover 1,218.5 1,218.5 1,203.0 1,203.0 15.5

Earnings EBITDA 62.5 9.1 71.6 75.3 0.7 76.0 (4.4)

EBIT 22.0 9.1 31.1 35.3 0.7 36.0 (4.9)

NPBT 15.5 9.1 24.6 24.5 0.7 25.2 (0.6)

NPAT 11.5 6.4 17.9 17.9 0.5 18.4 (0.5)

Shareholder Returns

EPS (cents) 6.11 3.37 9.48 9.65 0.28 9.93 (0.45)

Annualised post-tax return on equity

4.50% 6.99% 7.03% 7.24% (0.25%)

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Underlying results have remained resilient, broadly in line with FY14

• Statutory result adversely impacted by $9.1M in property impairments

EBITDA slightly lower – improved financial performance of Contracting businesses offset by Mining & Civil segment

Net financing costs have significantly reduced – a consequence of advanced debt amortisation and refinance of equipment finance facilities in May 2015

Group overheads slightly lower than FY14, notwithstanding several one-off costs were incurred

Contracting segment performing strongly

Segment ($M)

Contracting Mining & Civil

Property

FY15 FY14 FY15 FY14 FY15 FY14

Revenue 929.3 856.6 284.0 287.8 5.1 55.6

Profit / (loss) before tax – underlying 33.7 25.8 9.4 15.2 (0.4) (1.0)

Profit / (loss) before tax – statutory 33.7 25.8 9.4 15.2 (9.5) (1.7)

Profit / (loss) before tax margin (%) 3.6% 3.0% 3.3% 5.3% N/A N/A

Operational revenue from Contracting and Mining & Civil segments up circa 6% (i.e. excluding property sales)

• Enhanced Contracting result partially offset by reduced contribution from Mining and Civil business

Improved financial performance of the Group’s Contracting segment aligns with improved market conditions and continuation of selective tendering strategy

Reduction in financial performance of Mining & Civil segment reflective of difficulties in the resources sector

Despite statutory impairments, improved underlying property performance reflective of recent significant property sales, leading to reduced holding and overhead costs

• Residual property portfolio written down by $9.1M to a revised net realisable value

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Net cash of $151.0M (30 June 2014 – $115.4M) • Significant (elective) debt repayments

in FY15 • Reversal of favourable and abnormal

working capital movements in FY14 Net available liquidity at balance date

$113M, up from $66M over past 12 months

Reduction in property development inventory includes non-cash impairments of $9.1M

Continuing strategic reduction in plant and equipment investment and gearing levels

Current ratio of 1.29 at balance date (1.18 at 30 June 2014) • Achieving strategy to enhance balance

sheet strength

Strong balance sheet further enhanced in FY15 30 June 2015 30 June 2014

$M $M

Assets

Cash at bank and term deposits 182.7 190.2

Trade and other receivables 178.7 149.8

Inventory (property development) 27.6 41.3

Inventory (raw materials) 16.0 15.6

Plant and equipment 144.2 161.8

Intangible assets 27.7 27.7

Other assets 12.8 16.0

Total assets 589.7 602.4

Liabilities

Creditors and payables (current) 273.8 248.8

Interest bearing liabilities 31.7 74.8

Provisions 19.7 19.5

Other payables (non-current) 8.7 5.5

Total liabilities 333.9 348.6

Net assets 255.8 253.8

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Strategic capital management plan implemented in 2015 • Reducing capital investment levels in

Mining & Civil to more appropriately reflect market conditions

• Increasing capital in Contracting to allow for future growth and access to projects with higher financial barriers to entry

On-market share buy-back in place after considering alternate uses of surplus capital • Return of capital and payment of

dividend considered sub-optimal due to the lack of franking credits

• On-market buy-back considered the most efficient mechanism

• On-market buy-back retains flexibility to consider other strategic alternatives

Substantial capacity built for growth

Capital management initiatives in place Contracting Mining &

Civil Group

$M $M $M

Working capital * 71.6 16.0 87.6

Other current assets 11.3 15.8 27.1

Non-current assets 26.5 134.1 160.6

Other liabilities and provisions (22.5) (5.8) (28.3)

Total tangible assets 86.9 160.1 247.0

Intangible assets 30.5 10.0 40.5

Total capital allocation ** 117.4 170.1 287.5

Debt capital *** - 31.7 31.7

Equity capital 117.4 138.4 255.8

Net available liquidity **** 90.4 22.2 112.6

* Working capital for capital allocation purposes includes cash and term deposits, trade and other receivables and trade and other payables (current). ** Total capital allocation in Contracting and Mining & Civil segments includes allocation of Property and Unallocated assets. *** In addition to equipment finance facilities, the Group has a $25M revolving credit facility which is currently undrawn but fully available for use. **** Net available liquidity includes working capital and allocation of undrawn revolving credit facility.

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Significant cash balance

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Significant gross and net cash balances at 30 June 2015 $7.5M decrease in gross cash balance reflects normalisation of working capital and elective debt

repayments $35.6M increase in net cash balance reflects underlying profitability, disciplined practices and property

settlements Contractual debt repayments (principal and interest) of $14.5M due in FY16 – down from $49.0M (including

elective debt repayments) in FY15.

30 June 2015 $M

30 June 2014 $M

Change $M

Gross cash 182.7 190.2 (7.5)

Gross debt 31.7 74.8 (43.1)

Net cash 151.0 115.4 35.6

Significant debt headroom

Facility Facility limits $M Drawn $M Undrawn $M

Equipment Finance 80.0 31.7 48.3

Revolving Credit 25.0 - 25.0

Bank Guarantee 100.0 80.1 19.9

Surety Bonds 250.0 71.7 178.3

Comfortable level of debt with significant headroom • Mining & Civil business self sufficient in servicing debt

Core facility with syndicate of banks comprising ANZ, Bank of Queensland, BNP Paribas and HSBC Equipment Finance facility limits voluntarily reduced by approximately $60M in FY15, aligning with conservative

capital funding strategy and reducing funding costs Surety bond facilities drawn balance decreased by $58M in FY15

• Reflects return of securities on large scale projects completed in past two years and enhanced market demand for bank guarantees as performance security

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National work in hand remains strong

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Region Work in hand 30

June 2014

New projects secured

FY15

Extensions secured /

scope adjustments

FY15

FY15 Turnover

Work in hand

30 June 2015*

To be delivered

FY16

To be delivered

FY17

$M $M $M $M $M $M $M

Contracting 1,392 606 90 929 1,159 869 290

Mining & Civil* 449 106 (52) 284 219 146 73

TOTAL 1,841 712 38 1,213 1,378 1,015 363

* Includes $117M in forecast turnover attributable to three year extension at Cockatoo Island negotiated in April 2014, performance of which is linked to the ongoing economic feasibility of the mine.

84.1%

15.9% Work in hand by product type

Contracting

Mining & Civil

47.5%

20.3%

12.0%

15.9% 4.3%

Work in hand by region

Qld NSWVic WASA

Track record of replenishing work in hand - $202M of work added since 30 June

Contracting segment

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76.6%

FY15 operating revenue by segment

Contracting

Contracting segment was the major contributor to group earnings driven by improved market conditions across the construction sector targeted approach to tendering, and reflective of

successful project completion and key milestone achievements in FY15 enhanced quality of workbook which aligns with strategic objectives

Margins have significantly improved driven by selective tendering approach The commencement of a number of significant and high-profile projects has reduced the

Group’s contracting work in hand position to $1.2B at 30 June 2015 (30 June 2014: $1.4B) Subsequent to balance date, the Group has converted $193M in additional projects to be

delivered in FY16 and beyond

Contracting segment remains strong

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$M FY15 FY14 $ Change % Change

Revenue 929.3 856.6 72.7 8.5%

Profit / (loss) before tax 33.7 25.8 7.9 30.6%

Profit / (loss) before tax margin (%) 3.6% 3.0% N/A 0.6%

Contracting projects – awarded and completed

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Name Details Awarded Location Value $M

York & George Sydney CBD Mixed-use development May 2015 NSW 126

Newstead Series Brisbane residential development July 2015 Qld 95

Pullman Hotel, Ibis Hotel and Brisbane Airport Conference Centre

Hotels and convention centre at Brisbane Domestic Airport March 2015 Qld 78

Central Adelaide Adelaide CBD residential development April 2015 SA 70

Summer Hill Flour Mill Sydney mixed-use residential project August 2015 NSW 62

Reserve Bank of Australia Facility Large, secure, facility June 2015 Vic 55

Queensland State Velodrome Velodrome for Gold Coast 2018 Commonwealth Games August 2014 Qld 50

Knox Private Hospital Expansion of existing hospital for Healthscope August 2014 Vic 45

Name Details Completed Location Value $M

Cleveland Youth Detention Centre Redevelopment and expansion of existing facility December 2014 Qld 156

Base Security Improvement Program Security improvement works for Department of Defence January 2015 Qld, ACT, Vic 83

Port Macquarie Base Hospital Expansion

Three-level extension to existing facility December 2014 NSW 68

DHA Ermington Tranche 2 119 new dwellings for Defence Housing Australia October 2014 NSW 39

Mayfair Hotel Conversion of heritage-listed office into luxury suites November 2014 SA 37

Cardinia Shire Council Offices Four-level shire council offices October 2014 Vic 36

Australia Post MPF Expansion Expansion to Melbourne parcel facility April 2015 Vic 30

Contracting work in hand and delivery profile

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$-

$200M

$400M

$600M

$800M

$1,000M

$1,200M

$1,400M

$1,600M

$1,800M

$2,000M

$2,200M

Work in hand30/06/14

New projectssecured

Extensionssecured / scope

adjustments

FY15 revenue Work in Hand30/06/15

To be deliveredFY16

To be deliveredFY17+

$1,392M

$606M $90M $929M

$1,159M $869M

$290M

Diversified pipeline of contracting opportunities

* Reflects region of management team – projects may be undertaken in other states / territories 16

295

245

213

158

117

78 48 6

Work in Hand ($M) by Industry Sector

Education

Residential

Commercial

Health & Science

Defence / SecureEnvironmentsHotels

Sports

Other

24%

19%

17%

15%

15%

6% 3% 1%

Original Contract Value (%) by Industry Sector

Commercial

Health & Science

Education

Residential

Defence / SecureEnvironments

Sports

Hotels

Other

57% 24%

14%

5%

Work in hand by State (as at 30 June 15)

QLD *

NSW *

VIC

SA

Portfolio mix across a range of industries and regions

Targeting sectors where the Group has extensive expertise and experience

Diversified national credentials in Health, Education, Defence, Commercial, Residential and Retail and several key client relationships across these sectors

Mining & Civil segment

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23.4%

FY15 operating revenue by segment

Mining & Civil

Despite market conditions, revenue was only slightly lower than FY14 with all mining and civil projects producing a positive gross profit in FY15

Margin pressure on industry has driven reduced profitability of segment Strategic decision to reduce investment in segment to realign with subdued

operating environment

Mining & Civil revenue remained resilient despite tough operating market

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$M FY15 FY14 $ Change % Change

Revenue 284.0 287.8 (3.8) (1.3)%

Profit / (loss) before tax 9.4 15.2 (5.8) (38.2)%

Profit / (loss) before tax margin (%) 3.3% 5.3% N/A (2.0)%

A number of key projects won during the period

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Contract Client Mining / Civil contract Commodity

Capel Iluka Resources Mining Mineral Sands

Kathleen Valley Gold Project Ramelius Resources Mining Gold

Southern Cross – Cornishman Pit Hanking Gold Mining Gold

Tailings Storage Facility Sirius Resources Civil Nickel (civil works)

Spillway Remedial Works WA Water Corporation Civil N/A

Logue Brook Dam WA Water Corporation Civil N/A

Mining Contracts Client Status Commodity

Nullagine Iron Ore JV BC Iron Nullagine Completed in July 2015 Iron Ore

Woornack Rownack and Pirro (WRP) Iluka Resources Completed in April 2015 in line with end of mine life

Mineral Sands

Two projects completed during the period

Mining & Civil work in hand and delivery

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• Includes forecast turnover attributable to three year extension at Cockatoo Island negotiated in April 2014, performance of which is linked to the ongoing economic feasibility of the mine

$-

$100M

$200M

$300M

$400M

$500M

$600M

Work in hand30/06/14

New projectssecured

Extensionssecured / scope

adjustments

FY15 revenue Work in Hand30/06/15

To be deliveredFY16

To be deliveredFY17+

$449M

$106M $52M

$284M

$219M * $146M

$73M

Property Segment

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Ongoing commitment to capital recycling program for property assets to maximise shareholder value

• Final tranche settlement of Waterloo property to provide $12M in FY16 ($28M including deposits received to date)

• No additional property sales during the period

Book value of remaining property portfolio valued at $27.6M as at 30 June 2015 $9.1M pre-tax impairment charge recognised on certain property assets following a reassessment

of net realisable value on various properties. • Largest impairment recognised on Aquarium Avenue property as a result of proposed changes

to local area plan and uncertainty surrounding compensation arrangements.

Divestment of property assets ongoing

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Major Assets Remaining Location Property Type

Rue de Chapel retail units Chapel Street, Melbourne Completed retail units

Centra Park Industrial Estate Coolum, Sunshine Coast Development site – industrial

72 Aquarium Avenue Hemmant, Brisbane Development site – industrial

$’M FY15 FY14 $ Change % Change

Revenue 5.1 55.6 (50.5) (90.8)

Profit / (loss) before tax – underlying (0.4) (1.0) (0.6) 60.0

Profit / (loss) before tax – statutory (9.5) (1.7) (7.8) (458.8)

Strategy and outlook

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National delivery business model with strong credentials across all major sectors Focus remains on ensuring a high quality forward workbook through disciplined strategy of

tendering only on high quality projects Equity capital required for growth has been identified and allocated

• Watpac is only one of a few listed public companies in Australia to undertake traditional construction activities

• Access to debt and capital market a clear competitive advantage – endorsed through $20M increase in bank guarantee facility limit in October 2014

Key strengths • A healthy balance sheet and surplus available funding lines • A focus on building solid stakeholder relationships • Collaborative and innovative work methods • Unsurpassed credentials in the national construction sector across all types of projects • Diversification across geography and sectors

Key focuses of cost leadership, repeat clients, less competitive tendering, targeted work types

Simple strategy – grow thoughtfully

Contracting outlook

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Despite resources sector downturn, a number of new projects awarded in FY15 from new and long

standing clients Project awards the result of innovative work methods and a collaborative approach to working with

clients Focus remains on enhancing client relationships and work winning strategies. Future prospects dependent on market conditions, including commodity and foreign currency

pricing and general business confidence Business unit part of diversified Watpac Group – a competitive advantage Key objective in FY16 is to maximise plant & equipment utilisation

Mining & Civil outlook

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Current Mining Contracts Client Commodity

Capel Iluka Resources Mineral Sands

Cockatoo Island Pluton Resources Iron Ore

Kathleen Valley Gold Project Ramelius Resources Gold

Mt Magnet Ramelius Resources Gold

Southern Cross – Cornishman Pit Hanking Gold Gold

Tutunup South Iluka Resources Mineral Sands

Property outlook

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Group is committed to divesting Watpac’s $27.6M property development asset portfolio in a timely manner

At 30 June 2015, property assets represented a book value of 15 cents per share Commitment remains to divesting all remaining properties in a timely manner With no property debt, all proceeds from property asset settlements will continue to be

reinvested into existing operations and provide additional capital management opportunities

0 to 12 months 12 to 24 months 24 to 36 monthsProperty 1HFY16 2HFY16 1HFY17 2HFY17 1HFY18 2HFY18

Aquarium AvenueCoolum Industrial 146Coolum Industrial 5&6Kingston IndustrialRochedale `Rue de Chapel

Property developments assets anticipated realisation $11.1M $9.8M $6.7M

FY15 performance reflects strong contribution from Contracting segment with Mining & Civil operating amidst difficult market conditions

Solid pipeline of work in hand in Contracting segment across a broad range of sectors

Improved market conditions in construction sector enhances forward work opportunities – focus on repeat clients, less competitive tendering and targeted work types

Downturn in mining sector a risk to future work volumes and profitability – focus on cost competitive solutions and plant utilisation

Focused on capital recycling of property assets including contracted final tranche of Waterloo in FY16, whilst continuing to explore divestment options for remaining assets

With the increased strength of the balance sheet, capital management initiatives were put in place

• Shareholder value to be enhanced through introduction of an on-market share buy-back

• Flexibility retained to pursue other strategic growth alternatives

In summary

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Appendix

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Contracting Comprises the Group’s

Construction businesses Delivers quality

construction services across a number of high profile projects in all states and territories in Australia, currently with the exception of Tasmania and Western Australia

Overview of business segments

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Mining and civil Provides contract mining

services for small to medium projects throughout Australia and civil infrastructure activities in Western Australia

National approach to all activities with strong credentials in mining several commodities and civil infrastructure activities

Property Comprises the Group’s

remaining property development inventory portfolio

Strategy remains to divest all remaining property inventory assets and, with no associated debt, redeploy proceeds to existing operations

Disclaimer

This presentation contains summary information about Watpac Limited and its subsidiaries (‘Watpac’), and should be read in conjunction with other periodic and continuous disclosure announcements. While this results presentation is unaudited, it contains disclosures which are extracted or derived from Watpac’s Financial Report for the year ended 30 June 2015 which has been audited by the Group’s independent auditor. Information contained within this presentation is not financial product or investment advice and is not a recommendation to acquire or sell Watpac shares. It has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision investors or potential investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs, and seek their own independent professional advice. Forward looking statements, opinions and estimates are based on assumptions which are subject to change. Past performance information in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. All dollar values are in Australian dollars, unless otherwise stated.

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