WTM.L Regulatory News (WTM)

6 Oct 2006 07:00

Waterman Group PLC06 October 2006 WATERMAN BOOSTED BY ORGANIC GROWTH AS BOTH UK AND OVERSEAS OPERATIONS EXPAND Waterman Group plc, one of the UK's leading multidisciplinary engineering andenvironmental consultancies, today announces its preliminary results for theyear ended 30 June 2006. • Revenue increased to £83.7m (2005: £72.7m) • Profit before tax increased to £4.2m (2005: £3.8m) • Basic earnings per share of 9.7p (2005: 8.7p) • Final dividend proposed up to 3.4p (2005: 3.3p) • Net Asset Value per share up to 105p (2005: 102p) • Substantial long term order book • Major new international projects awarded • Major Urban Regeneration projects continue at: - Whitecity TM, West London - The Paradise Project, Liverpool - Broadmead redevelopment, Bristol - The Shires, Leicester • Major new appointments including: - Trocadero, London - Former Stock Exchange Tower, London - 1 Wood Street, City of London - Watermark Place, London • Key international projects: - Point Depot concert venue, Dublin - International Financial Centre, Dubai - Master plan - Tianjin, China - Moscow City Tower Commenting on the results, Bob Campbell, Managing Director said, " We are delighted with the performance that the group has delivered. We havetaken steps to broaden the services that we offer and, we are benefiting fromthe increased range of opportunities that are available to us. There has been asignificant growth in the demand for our multi-disciplinary services. We areworking on many of the UK's largest construction and regeneration projects, manyof which offer good opportunities for a number of our different operations. Weare experiencing significant growth from our overseas businesses. " The future for the group is excellent. We anticipate further organic growthand we continue to evaluate a number of bolt-on acquisitions. We are looking atthe future with confidence." -ends- Date: 6 October 2006For further information contact: Waterman Group plc cityPROFILEBob Campbell, Managing Director Simon CourtenayGraham Hiscocks, Finance Director 020-7448-3244020-7928-7888web: www.waterman-group.co.uk Chairman's Statement In the year to 30 June 2006, I am pleased to report that, under the new IFRSreporting standards, Waterman Group achieved an increased pre tax profit of£4.2m (2005 : £3.8m) on revenue of £ 83.7m (2005 : £ 72.7m). Basic earnings pershare were 9.7p (2005: 8.7p) and net assets per share stand at 105p (2005 :102p). The board is recommending an increased final dividend of 3.4p (2005 :3.3p) per share. This final dividend, with the increased interim dividend of2.0p, which was paid on 19 April 2006, makes a total dividend for the year of5.4p (2005 : 5.2p). The final dividend will be payable on 15 December 2006 toall shareholders on the register on 24 November 2006. These results demonstrate a significant growth in revenue and profits comparedto the previous financial year. This has been achieved principally by organicgrowth, with all divisions reporting increased levels of activity. Group Activities - UK During the year all of the Group's UK based companies have performed well andexcellent progress has been made on a number of the UK's largest projects, manyof which have been awarded on a multi-discipline basis. These include majorurban regeneration projects in London, Bristol, Nottingham, Leicester, Leeds andLiverpool. In London, the Group is working on an increasing number of newcommercial and mixed use projects, as the market continues to recover and asignificant number of long term framework agreements have been secured withmajor clients. Building Services Waterman Building Services, the Group's specialist mechanical and electricalconsultancy, has had a successful year. The company has advised on a wide rangeof projects across all sectors including retail, commercial, residential,education and healthcare. Retail projects include whitecityTM in West London,Met Quarter in Liverpool, Central Fife Retail Park and a roll out programme ofnew dealerships for Audi UK. Advice is also being given to Aspire consortium forthe Aldershot Garrison project under the government's private finance initiativeprogramme. Civil Engineering The Group's civil engineering activities have grown significantly during theyear, with increased turnover in the rail, highway and developmentinfrastructure sectors. Waterman Civils Limited has been appointed by theHighways Agency to the National Project Support Services Framework, following achallenging selection process, which is expected to produce significantadditional workload over the next five years. In the rail sector the assetmapping database 'Autorail' continues to be rolled out with the objective ofcovering the entire network. This system has become the 'industry standard' andwill be developed further in future years. The construction of the newwhitecityTM underground depot in West London and the alterations to Moor StreetStation in Birmingham have been completed. At Heathrow Airport, the design ofthe World Cargo Centre has been completed. Waterman Aspen, the Group's civil engineering outsourcing specialist hascontinued to develop its unique position in the market. Staff numbers have grownfrom 220 up to 260 during the year. Clients include the Highways Agency, TheScottish Executive and many county, city and borough councils. Recruitmentdifficulties in the sector have led to strong demand from the company'sincreasingly diverse client base. Continued expansion is planned for the currentyear. Environmental Services The Group's environmental consultancies, Waterman Environmental, Waterman CPMand Waterman Sustainable Energy, have all performed well during the year.Waterman Environmental has grown strongly during the year and has successfullydelivered an increasing number of environmental impact assessments (EIA's) andstrategic environmental assessments (SEA's). These are essential elements in newplanning applications. Due diligence reports have been provided in connectionwith a number of large corporate transactions with an aggregate value in excessof £10 billion. Waterman CPM, which provides innovative planning and designsolutions has expanded its Cirencester office and continued to develop itsoperations in Warrington. Projects include Piccadilly Barn development inManchester and the Shropshire Hills Area of Outstanding Natural Beauty. WatermanSustainable Energy continues to advise its clients on a number of major wastemanagement schemes, Biomass and Biofuel projects and carbon management systems.In view of the considerable importance of this sector, the Group plans furtherinvestment in the current year. Structural Engineering Waterman Structures is the Group's principal provider of structural engineeringservices within the UK. In 2005 the business was reorganised to combine the structural operations inLondon, the Midlands, the North of England and Scotland. Major projects inprogress include some of the UK's largest construction contracts: The ParadiseProject, Liverpool, Broadmead, Bristol and The Shires, Leicester. The forwardorder book contains a number of other major new commissions, which will providea workflow for the next five years. In the education sector, current projectsinclude new schools programmes in Yorkshire and Scotland and in healthcare,advice has been provided for a number of new hospitals including the newLeicester Pathway project. In the industrial sector, construction is now inprogress on a major new printing works for News International at Broxbourne inHertfordshire. Group Activities - Overseas Work in Ireland is handled by Moylan, the Group's Dublin based multidisciplineconsultancy. During the year a record volume of work has been successfullycompleted. Civil and structural design work for the residential sectorrepresents the largest part of the business, however, considerable progress hasbeen made in gaining commissions in the new public sector infrastructureprogramme. Staff numbers have increased and additional office space has beenleased in Dublin. The company has an excellent long term order book. During the year the Group's International operation has grown rapidly, withsignificant new project wins in some of the world's fast growing constructionmarkets, including Russia, China and United Arab Emirates. In Russia, the orderbook comprises new buildings with an aggregate floor area in excess of 1.5million m2, including Moscow City Tower which is a 600m tall building designedby Foster and Partners for the STT development company. In China, recent masterplanning successes are expected to lead to new commissions in Tianjin. In Dubai,progress has been made on Dubai Festival City, the International FinancialCentre and two 60 storey tower buildings designed in conjunction with Frencharchitects ADP. In Australia, the Group's Sydney-based company, Waterman AHW,has successfully completed the Latitude East commercial tower building and theNorwest Business Park. Acquisitions On 9 December 2005 the Group acquired 100% of the share capital of JPEnvirosystems, a specialist environmental consultancy based in London andSheffield. The company now trading as Waterman Envirosystems, advises onoperational permits, environmental management and professional training. Sincejoining the Group the company has continued to grow and has made a positivecontribution to the Group's environmental business. On 26 October 2005, the Group acquired an additional 21% interest in itsAustralian subsidiary, Waterman International (Asia) Pty. Strategy Across the Group's operations and regions there remain many opportunities forfuture organic and acquisitive growth. In the UK, the range of services is beingextended by the addition of new energy and environmental services. Outside theUK, the drive continues to build on early successes in Australia, China and theUAE. Additional resources are being provided to handle the increasing workloadin Ireland and Eastern Europe. A long term succession strategy is in place whichwill ensure full continuity and will provide effective management of all theGroup's activities in the future. Employee Relations As a service business, our reputation is dependant upon the high quality andcontinued support of our staff. The level of repeat business from our clients isa reflection of their confidence in our ability to deliver an effective service.I would like to take this opportunity to thank all members of staff for theirhard work in the last year during which a record volume of work has beensuccessfully completed. The Group rewards its staff through a series of salary and benefits packages.Annual awards under the share incentive plan provide free shares to staff whohave been employed throughout the financial year. A share option scheme providessenior management with the opportunity to acquire ordinary shares. A long termincentive plan has recently been introduced to provide a tax effective sharebenefit to management which vests upon the achievement of challengingperformance targets. Waterman Group operates flexible benefit arrangements which enable staff toselect from a range of benefits. We are currently developing a secure web basedsystem which will extend the range of benefits currently offered and provideeach member of staff with online access to his or her flexible benefitstatement. Future Prospects The Group has achieved a high level of organic growth during the last financialyear and I anticipate that this will continue in the current year. We can alsoexpect a greater contribution from the recent acquisitions and from the fastgrowing markets in which the Group operates, in the UK and overseas. The Group's internal reorganisation, implemented last year, is deliveringgreater efficiency and enhanced levels of service. Our long term order book hascontinued to grow and we have added a number of important long term frameworkagreements with major clients, which will continue to deliver increasing volumesof work. All sectors are currently performing well and your Board views thecoming year with confidence. Roger FidgenChairman Group Income Statementfor the year ended 30 June 2006 Restated Year Ended Year ended 30 June 2006 30 June 2005 (unaudited) (unaudited) Notes £'000 £'000-------------------------------------------------------------------------------- Revenue - continuing operations 83,680 72,712--------------------------------------------------------------------------------Earnings before interest, tax, depreciationand amortisation (EBITDA) 5,897 5,530 Depreciation and amortisation (1,310) (1,467)--------------------------------------------------------------------------------Operating profit 4,587 4,063 Interest payable (518) (488) Interest receivable 145 188--------------------------------------------------------------------------------Profit before taxation 4,214 3,763 Taxation 3 (1,421) (1,299)--------------------------------------------------------------------------------Profit for the financial year fromcontinuing operations 2,793 2,464 Profit attributable to equity shareholders 2,749 2,432Profit attributable to minority interest 44 32-------------------------------------------------------------------------------- 2,793 2,464-------------------------------------------------------------------------------- Basic earnings per share 4 9.7p 8.7p Diluted earnings per share 4 9.5p 8.5pDividend paid per share in the year 5 5.3p 4.9pDividend proposed per share 5 3.4p 3.3p Group Balance Sheetas at 30 June 2006 Restated As at As at 30 June 2006 30 June 2005 (unaudited) (unaudited) £'000 £'000Non-current assets Property plant and equipment 13,536 13,795Goodwill 11,128 10,955Intangible assets 335 365Loans and receivables 10 10-------------------------------------------------------------------------------- 25,009 25,125--------------------------------------------------------------------------------Current assets Trade and other receivables 35,611 33,800Cash and cash equivalents 3,332 3,975-------------------------------------------------------------------------------- 38,943 37,775--------------------------------------------------------------------------------Total assets 63,952 62,900-------------------------------------------------------------------------------- Current liabilities Trade and other payables 24,264 23,478Financial liabilities - borrowings 1,251 2,463Current tax liability 583 1,041-------------------------------------------------------------------------------- 26,098 26,982--------------------------------------------------------------------------------Non-current liabilities Financial liabilities - borrowings 4,927 5,314Provisions 2,023 1,262Deferred tax liability 1,042 924-------------------------------------------------------------------------------- 7,992 7,500-------------------------------------------------------------------------------- --------------------------------------------------------------------------------Total liabilities 34,090 34,482-------------------------------------------------------------------------------- --------------------------------------------------------------------------------Net assets 29,862 28,418-------------------------------------------------------------------------------- Equity Share capital 2,856 2,791Share premium account 11,685 11,452Merger reserve 2,146 2,146Revaluation reserve 1,450 1,450Profit and loss account 11,361 9,875--------------------------------------------------------------------------------Total shareholders' equity 29,498 27,714Minority Interest 364 704--------------------------------------------------------------------------------Total equity 29,862 28,418-------------------------------------------------------------------------------- Group Cash Flow Statementfor the year ended 30 June 2006 Restated Year ended Year ended 30 June 2006 30 June 2005 (unaudited) (unaudited) £'000 £'000 Cash flows from operating activitiesCash generated from operations (see below) 5,899 5,731Interest paid (477) (454)Interest received 145 188Tax paid (1,581) (782)--------------------------------------------------------------------------------Net cash from operating activities 3,986 4,683-------------------------------------------------------------------------------- Cash flows from investing activitiesPurchase of subsidiary undertakings (582) (320)Deferred consideration paid (1,272) (888)Purchase of intangible fixed assets (150) (264)Purchase of property, plant and equipment (PPE) (901) (1,199)Proceeds from sale of PPE 32 40--------------------------------------------------------------------------------Net cash used in investing activities (2,873) (2,631)-------------------------------------------------------------------------------- Cash flows from financing activitiesShare issues 298 36Repayments of borrowing (445) (409)Repayments on finance leases (62) (64)Equity dividends paid (1,499) (1,363)Purchase of shares by Waterman Trustees Limited (165) (96)--------------------------------------------------------------------------------Net cash used in financing activities (1,873) (1,896)-------------------------------------------------------------------------------- Effect of exchange rate changes 21 18--------------------------------------------------------------------------------Net (decrease)/increase in cash and cashequivalents (739) 174-------------------------------------------------------------------------------- Reconciliation of profit for the financial year tocash generated from operations Profit for the financial year 2,793 2,464Taxation 1,421 1,299Interest payable 518 488Interest receivable (145) (188)Amortisation of other intangible assets 249 294Impairment of goodwill - 177Depreciation 1,061 1,173Loss/(profit) on disposal of property, plant andequipment 1 (18)Shares granted under the SIP 144 104Non cash charge 35 54Changes in working capitalIncrease in trade and other receivables (1,683) (4,229)Increase in trade and other payables 785 3,332Increase in provisions 720 781--------------------------------------------------------------------------------Cash generated from operations (see above) 5,899 5,731-------------------------------------------------------------------------------- Group statement of changes in shareholders' equityFor the year ended 30 June 2006 Profit Share Share Merger Revaluation and Loss Minority Total Capital Premium Reserve Reserve Account Total Interest Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------------------------------------Balance at 1 July 2004 2,780 11,423 2,110 1,450 8,508 26,271 607 26,878 Currency translation adjustments - - - - 150 150 65 215Deferred tax charge for the year - - - - 86 86 - 86Share based payments charge for the year - - - - 54 54 - 54Adjustment in respect ofShare Incentive Plan - - - - 6 6 - 6Profit on disposal of own shares - - - - 2 2 - 2--------------------------------------------------------------------------------------------------------------Income recognised directly in equity - - - - 298 298 65 363 New ordinary shares issued 11 29 36 - - 76 - 76Profit for the financial year - - - - 2,432 2,432 32 2,464Dividend - - - - (1,363) (1,363) - (1,363)--------------------------------------------------------------------------------------------------------------Balance at 30 June 2005 2,791 11,452 2,146 1,450 9,875 27,714 704 28,418 Currency translation adjustments - - - - 21 21 (18) 3Deferred tax charge for the year - - - - 201 201 - 201Share based payments charge for the year - - - - 35 35 - 35Adjustment in respect ofShare Incentive Plan - - - - (21) (21) - (21)Acquisition of 21% ofminority interest insubsidiary undertaking - - - - - - (366) (366)--------------------------------------------------------------------------------------------------------------Net income / (expense) recogniseddirectly in equity - - - - 236 236 (384) (148) New ordinary shares issued 65 233 - - - 298 - 298Profit for the financial year - - - - 2,749 2,749 44 2,793Dividend - - - - (1,499) (1,499) - (1,499)--------------------------------------------------------------------------------------------------------------Balance at 30 June 2006 2,856 11,685 2,146 1,450 11,361 29,498 364 29,862============================================================================================================== Notes to the cash flow statement a) Analysis of net debt At 1 Other At 30 July non-cash Exchange June 2005 Cashflow changes movements 2006 £'000 £'000 £'000 £'000 £'000 Cash balances 3,975 (664) - 21 3,332Bank overdrafts (451) (96) - - (547)--------------------------------------------------------------------------------Cash and cash equivalents 3,524 (760) - 21 2,785 CurrentBank loans (1,950) 1,717 (425) (8) (666)Finance leases (61) 62 (12) (2) (13)Non-currentBank loans (5,264) - 350 - (4,914)Finance leases (50) - 12 - (38)-------------------------------------------------------------------------------- (7,325) 1,779 (75) (10) (5,631)-------------------------------------------------------------------------------- Total (3,801) 1,019 (75) 11 (2,846)-------------------------------------------------------------------------------- b) Reconciliation of net cashflow to net debt Year ended Year ended 30 June 2006 30 June 2005 £'000 £'000 (Decrease)/increase in cash balances in the year (664) 113(Increase)/decrease in bank overdrafts in theyear (96) 43--------------------------------------------------------------------------------(Decrease)/increase in cash in the year (760) 156 Net reduction in borrowings 1,704 1,039Inception of hire purchase leases - (2)--------------------------------------------------------------------------------Movement in net debt resulting from cash flows 944 1,193 Exchange adjustments 11 12--------------------------------------------------------------------------------Movement in net debt in the year 955 1,205 Net debt at 1 July 2005 (3,801) (5,006)--------------------------------------------------------------------------------Net debt at 30 June 2006 (2,846) (3,801)-------------------------------------------------------------------------------- Notes 1. The Preliminary Announcement for the twelve months ended 30 June 2006 whichdoes not constitute the Group's statutory accounts as defined in Section 240 ofthe Companies Act 2005 was approved by the directors on 3 October 2006. The Preliminary Announcement is unaudited but has been reviewed by theindependent auditors. The disclosures made meet the requirements of the ListingRules. The comparative figures for the financial year ended 30 June 2005 which arebased on the financial statements for that year, adjusted for the effects ofIFRS, are unaudited. The report of the auditors on the financial statements forthe year ended 30 June 2005 which were prepared in accordance with UK GAAP wasunqualified and did not contain a statement under section 237 (2) or (3) of theCompanies Act 1985.The financial statements for the financial year ended 30 June2005 have been delivered to Companies House. The comparative financial statements for the year ended 30 June 2005 incorporaterestatements with regard to the revaluation of freehold property to its fairvalue as at the date of transition to IFRS, in accordance with IFRS 1, increasenet assets by £1.45m and reclassifications of the debtor and creditor balancesrelating to construction contracts in accordance with IAS 11 had no impacton net assets or profit for the year. The date of transition to IFRS from UKGAAP for the Group was 1 July 2004. The significant changes arising from thetransition are as set out in our Interim Report. 2. On 9 December 2005, the Group acquired 100% of the issued share capital of JPEnvirosystems Limited, an environmental consultancy based in Sheffield for amaximum consideration of £325,000. The company was subsequently renamed WatermanEnvirosystems Limited however its trade has been transferred to WatermanEnvironmental Limited. On 26 October 2005, the Group acquired an additional 21% interest in itsAustralian subsidiary, Waterman International (Asia) Pty for A$700,430 plusexpenses. 3. The tax charge for the year of £1,421,000 represents an effective rate of33.7% on profit before taxation. Full provision is made for taxation in Irelandwhere the corporate tax rate is 12.5%. 4. The basic earnings per share has been calculated on the profit attributableto equity shareholders and is based on a weighted average of 28,243,803 ordinaryshares (30 June 2005: 27,844,927). The diluted earnings per share has been calculated on the profit attributable toequity shareholders and is based on a weighted average of 29,012,872 ordinaryshares (30 June 2005: 28,574,478). 5. An interim dividend of 2.0p (2005: 1.9p) was paid on 19 April 2006. A finaldividend payable of 3.4p per share (2005: 3.3p) will be recommended by directorsfor approval at the Annual General Meeting. 6. The maintenance of the website is the responsibility of the directors; thework carried out by the auditors does not involve consideration of these mattersand accordingly, the auditors accept no responsibility for any changes that mayhave occurred to the Preliminary Announcement since it was initially presentedon the website. 7. Legislation in the United Kingdom governing the preparation and disseminationof financial information may differ from legislation in other jurisdictions 8. The Annual Report and Accounts for Waterman Group plc for the year ended 30June 2006 are to be posted to shareholders on 1 November 2006 and will beavailable to members of the public from that date from the Group's registeredoffice at Pickfords Wharf, Clink Street, London SE1 9DG. 9. The Annual General Meeting will be held on Tuesday 5 December 2006 at 12.00noon at The Apothecaries Hall, Blackfriars Lane, London EC4. The final dividendif approved will be paid on 15 December 2006 to shareholders on the register on24 November 2006. This information is provided by RNS The company news service from the London Stock Exchange