9.7% franked dividend, high growth

WTP - Watpac. Construction company, small cap. profits grew at 19% last year in difficult market, forecast higher growth this year. Pays reliable dividend when market is returning to dividend stocks. Worth a look. Chairmans address below:

Chairman`s Address to Shareholders

WATPAC LIMITED 2002-11-07 ASX-SIGNAL-G

HOMEX - Brisbane

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(1) INTRODUCTION/OVERVIEW

WATPAC LIMITED CONTINUES TO GROW, EVIDENCED BY THE 19 PERCENT
INCREASE IN AFTER TAX PROFIT DURING THE 2002 FINANCIAL YEAR
RESULTING IN AN 18.25 PERCENT RETURN ON SHAREHOLDERS' EQUITY.

CORRESPONDINGLY, EARNINGS PER SHARE GREW BY 17.1 PERCENT AND
DIRECTORS RESOLVED AN INCREASED DIVIDEND PAYOUT OF 3.5 CENTS
PER SHARE.

IN REVIEWING THE PERFORMANCE OF THE COMPANY OVER THE PAST FIVE
YEARS, IT IS WORTH TO NOTE THAT:

* NET TANGIBLE ASSETS HAVE GROWN FROM $14.93 MILLION TO $22.56
MILLION AFTER DIVIDEND PAYMENTS OF $9.85 MILLION

* RETURN ON SHAREHOLDERS' FUNDS HAVE AVERAGED 19.8 PERCENT PER ANNUM

DIRECTORS ARE PLEASED WITH THIS PERFORMANCE GIVEN THAT WE FACE STIFF
COMPETITION IN THE CONSTRUCTION SECTOR.

LANDMARK PROJECTS COMPLETED

MAJOR CONSTRUCTION AND REFURBISHMENT PROJECTS COMPLETED BY THE
COMPANY OVER THE PAST YEAR INCLUDE:

* FOREST LAKE HIGH SCHOOL (PP Slide)

* PORTAL BUSINESS PARK (PP Slide)

* METROPOLIS APARTMENTS IN BRISBANE'S CBD (PP Slide)

* DEEPWATER POINT APARTMENTS AT LABRADOR (PP Slide)

* ST ANDREW'S HOSPITAL (NEW WARDS AND CARPARKING) (PP Slide)

* QANTAS FOUNDERS' OUTBACK MUSEUM AT LONGREACH (PP Slide)

* DUNDRENAN APARTMENTS AT EAST BRISBANE (PP Slide)

* MYER CENTRE CINEMAS AND FOOD COURT (PP Slide)

* CITY BEACH SURF SHOP IN THE QUEEN STREET MALL (PP Slide)

* BRISBANE ADMINISTRATION CENTRE (PP Slide)

* CITILINK BUSINESS CENTRE OFFICES AT BOWEN HILLS (PP Slide)

OUTLOOK

THE IMMEDIATE OUTLOOK FOR BUILDING ACTIVITIES IS SATISFACTORY AS THE
DEMAND CONTINUES FOR RETAIL, COMMERCIAL, EDUCATIONAL, HEALTH
FACILITIES AND RESIDENTIAL APARTMENTS. THE COMPANY IS WELL POSITIONED
TO SECURE A SHARE OF THIS WORK ALTHOUGH THE TIMING OF THESE PROJECTS
MAY WELL EXTEND BEYOND THE 2003 FINANCIAL YEAR.

THE GROWTH FOR REFURBISHMENT OPPORTUNITIES IN THIS FINANCIAL YEAR IS
LESS THAN PREVIOUS YEARS BUT THIS FOLLOWS A LONG PERIOD OF SUSTAINED
GROWTH IN TURNOVER. NOTWITHSTANDING THIS, WE CONTINUE TO MAINTAIN
PRE-EMINENT STATUS IN THIS BUSINESS AREA AND SHOULD BENEFIT FROM
LONGER-TERM OPPORTUNITIES ARISING FROM AGEING CBD BUILDINGS IN
BRISBANE.

DIRECTORS HAVE ENDORSED A STRATEGIC PLAN PREPARED BY MANAGEMENT WHICH
UNDERTAKES A NUMBER OF INITIATIVES TO FURTHER DEVELOP THE GROUP'S
STRENGTH IN BUILDING AND CONSTRUCTION. ACCORDINGLY, I AM PLEASED TO
ADVISE SHAREHOLDERS THAT THE FIRST OF THESE INITIATIVES HAS BEEN THE
ESTABLISHMENT OF A SMALL WORKS DIVISION TO UNDERTAKE WORK IN AREAS
NOT PERCEIVED AS WATPAC'S TRADITIONAL MARKET.

WE ARE ALSO KEEPING A CLOSE WATCH ON TWO SIGNIFICANT ISSUES THAT WILL
IMPACT UPON THE CONSTRUCTION INDUSTRY THESE BEING THE COLE ROYAL
COMMISSION PROCEEDINGS INTO THE CONSTRUCTION INDUSTRY AND THE TRADE
UNIONS' PUSH FOR A 36-HOUR. THIS COULD RESULT IN INDUSTRIAL UNREST
OVER THE NEXT TWO YEARS.

CONSTRUCTION DIVISION

THE CONSTRUCTION DIVISION HAS BEEN INVOLVED IN A WIDE VARIETY OF
BUILDING AND REFURBISHMENT PROJECTS OVER THE PAST YEAR, STRETCHING
FROM TOWNSVILLE TO THE GOLD COAST.

ONGOING MAJOR PROJECTS FOR THIS DIVISION INCLUDE:

* THE LANDMARK SUNCORP METWAY STADIUM REDEVELOPMENT

* THE DOCKS APARTMENTS STAGES 1 AND 2 AT KANGAROO POINT IN BRISBANE

* SEAFORTH STAGE 2 APARTMENTS AT MAROOCHYDORE

* MACARTHUR CENTRAL RETAIL COMPLEX CONSTRUCTION AND TENANCY FITOUT
CONTRACTS IN BRISBANE'S CBD

* BRISBANE GRAMMAR SCHOOL

* EMMAUS AGED CARE FACILITY, NUDGEE

* PACIFIC FAIR SHOPPING CENTRE UPGRADE AT THE GOLD COAST

* CITILINK BUSINESS CENTRE STAGE 2 UPGRADE

AS MENTIONED PREVIOUSLY A MAJOR FOCUS CONTINUES TO BE OUR INVOLVEMENT
IN THE SUNCORP STADIUM REDEVELOPMENT. OUR MANAGING DIRECTOR DAVID
LITTLE WILL SHORTLY PRESENT AN OVERVIEW OF THE PAST TWELVE MONTHS OF
THE PROJECT AND AN ACCOMPANYING VIDEO WHICH HIGHLIGHTS THE PROJECT'S
PROGRESS.

SPECIAL ARRANGEMENTS HAVE BEEN MADE FOR SHAREHOLDERS TO VISIT
THE PROJECT SITE TO SEE ITS PROGRESS FIRST HAND, AND I AM DELIGHTED
TO NOTE THAT SOME OF YOU HAVE ALREADY VISITED THE SITE
AT THE BEGINNING OF THIS WEEK. I AM SURE YOU WILL AGREE WITH ME THAT
THE SIZE OF THE REDEVELOPMENT IS IMPRESSIVE AND CREATES A
STRIKING VISUAL IMPACT.

PROPERTY DEVELOPMENT DIVISION

PROPERTY DEVELOPMENT ACTIVITIES ARE UNDERTAKEN TO AUGMENT
CONSTRUCTION PROFITS. THE FINANCIAL CONTRIBUTION FROM THIS DIVISION
EQUATED TO 30 PERCENT OF THE COMPANY'S AFTER TAX PROFIT WITH
CONTRIBUTION ARISING FROM:

* SALE OF UNITS AT NEWSTEAD COMMERCIAL VILLAGE

* SALES OF REMAINING UNITS AT HEADLAND CREST APARTMENTS

* SALE OF A RETAIL DEVELOPMENT AT ORMEAU

* SALE OF THE COMPANY'S INTEREST IN THE QUEEN STREET CENTRAL
PROJECT

MOST OF WATPAC'S RECENT PROPERTY INVESTMENTS HAVE ARISEN FROM GROWTH
IN RETAIL MARKETS BEING PURSUED BY MAJOR RETAILERS SUCH AS WOOLWORTHS
AND COLES AND ACCORDINGLY PROJECTS THAT WILL GENERATE PROPERTY
RETURNS IN 2002 - 2003 YEAR INCLUDE:

* NORTH WARD SHOPPING CENTRE, TOWNSVILLE

* BEERWAH MARKETPLACE

* COOLUM RETAIL PROJECT

SHAREHOLDERS

SHAREHOLDERS WILL ALSO BE PLEASED TO KNOW THAT WATPAC WAS RECOGNISED
AS ONE OF AUSTRALIA'S BEST PERFORMING COMPANIES EARLY THIS YEAR. THE
COURIER-MAIL REPORTED THAT THREE YEAR AVERAGE ANNUAL RETURNS OF 18.4
PERCENT WERE ACHIEVED, RANKING THE COMPANY THIRD AMONGST LISTED
PUBLIC COMPANIES IN QUEENSLAND AND THIRTY-SECOND IN AUSTRALIA.

WE THANK YOU FOR YOUR CONTINUED LOYALTY TO THE COMPANY AND I
CAN ASSURE YOU THAT DIRECTORS ARE COMMITTED TO PROVIDING
REGULAR DIVIDEND RETURNS.

DIRECTORS

BOARD MEETINGS HELD DURING THE YEAR INCLUDED THREE MEETINGS HELD ON
SITES HIGHLIGHTING THE DIRECTORS' COMMITMENT TO REMAINING CLOSE TO
OUR CORE BUSINESS.

WE CONTINUE TO SUPPORT THE COMPANY'S COMMITMENT TO IMPROVING WATPAC'S
HEALTH AND SAFETY RECORD AND ENVIRONMENTAL PERFORMANCE AND ON YOUR
BEHALF WE WISH TO COMMEND THE COMPANY'S MANAGEMENT AND STAFF ON THEIR
PERFORMANCE IN THESE CRITICAL AREAS. ADDITIONALLY, AN INTEGRAL PART
OF THE COMPANY'S OPERATIONS IS A CIVIC RESPONSIBILITY AND WE CONTINUE
TO SUPPORT COMMUNITY GROUPS SUCH AS THE CEO CHALLENGE PROGRAMME, THE
ENDEAVOUR FOUNDATION, THE HEAR & SAY CENTRE, VARIOUS HOSPITALS AND
THE QANTAS FOUNDERS' OUTBACK MUSEUM AT LONGREACH.

INFORMATION TECHNOLOGY

WE HAVE CONTINUED TO INVEST IN IMPROVING OUR INFORMATION TECHNOLOGY
SYSTEMS. OUR KEY INITIATIVE WAS THE UPGRADING OF THE 15-YEAR OLD
CONSTRUCTION SOFTWARE TO THE NEW INTEGRATED COINS SYSTEM. THE NEW
PROGRAMME WAS IMPLEMENTED SUCCESSFULLY AND TIME SAVINGS ARE ALREADY
BEING ACHIEVED THROUGH THE STREAMLINING OF PRACTICES THAT THIS NEW
SOFTWARE HAS BROUGHT.

THESE IT IMPROVEMENTS WILL CONTINUE TO CONTRIBUTE TO THE GROUP'S
ONGOING EFFICIENCIES AND COMPETITIVE ADVANTAGE.

EMPLOYEES

SEVERAL STRATEGIC EXECUTIVE APPOINTMENTS TO WATPAC IN THE PAST YEAR
HAVE STRENGTHENED THE MANAGEMENT TEAM. THEIR CONTRIBUTION ALONG WITH
ALL OUR PERSONNEL IN IMPROVING THE STRATEGIC AND OPERATIONAL ASPECTS
OF THE BUSINESS HAS RESULTED IN THE EXCELLENT GROWTH AND RETURNS
REPORTED. ON BEHALF OF THE BOARD I THANK OUR PERSONNEL FOR THEIR
VALUED COMMITMENT AND ACKNOWLEDGE THEIR ROLE IN ACHIEVING SUCH
EXCELLENT RESULTS.

CONCLUSION

OUR FORWARD ORDER BOOK AT 30 JUNE 2002 HAS REMAINED STEADY AT $148.12
MILLION. THIS START TO THE 2003 YEAR COUPLED WITH AN ENCOURAGING
MEDIUM-TERM OUTLOOK FOR THE CONSTRUCTION MARKET PROVIDE FIRM
OPPORTUNITIES FOR WATPAC TO EXPAND ITS BUSINESS.

WE ANTICIPATE SECURING CONTRACTS WHICH WILL IMPROVE OUR PERFORMANCE
IN REVENUE AND PROFIT GROWTH IN THE MEDIUM TO LONG TERM.
ADDITIONALLY, WE WILL CONTINUE TO UTILISE AND DEVELOP OUR KEY
RESOURCES OF EXPERIENCED QUALITY STAFF, A STRONG BALANCE SHEET AND
SIGNIFICANT CASH RESERVES FOR FUTURE INVESTMENT IN PROPERTY
DEVELOPMENT AND OTHER BUSINESS OPPORTUNITIES.