4 Oct 2010 07:00
WATERMAN GROUP PLC
Preliminary Results Announcement for the Year Ended 30 June 2010
Waterman Group plc, the international engineering and environmental consultancy, today announces its preliminary results for the year ended 30 June 2010.
| Financial Highlights | Note | 2010 | 2009
|
| ·; Revenue |
| £83.2m | £122.4m
|
| ·; (Loss)/earnings before interest, tax, depreciation and amortisation
| 1 | (£2.3m) | £6.3m |
| ·; (Loss)/profit before tax
| 1 | (£5.0m) | £2.6m |
| ·; Profit before tax, exceptional items and amortisation of acquired intangible assets
|
| £1.1m | £3.1m |
| ·; Net debt at 30 June
|
| £6.4m | £10.2m |
| ·; Net asset value per share |
| 110p | 126p
|
| ·; Dividend per share |
| 1.8p | 2.2p |
Notes
1. The pre tax profits include a provision of £5.6m for the exceptional items as outlined in the trading update issued on 19th August 2010.
Commenting on the results, Nick Taylor, Chief Executive said:-
" Waterman has traded through a difficult period when property markets in the UK and overseas have remained subdued by the downturn in the economy. Specific actions have been taken to align the business with future workload and prospects. Good progress has been made on many legacy issues and we can now focus on the future. A considerable amount of surplus office space will be released over the next two years which will increase our profitability."
" Although our markets are brighter than before, there is reason to expect a slow recovery. Government finances in deficit, reduced stimulus measures, rising borrowing margins, higher inflation and risks for falling asset prices may all be contributory factors. We remain alert to opportunities which will arise and the risk that new threats may become apparent."
" Waterman is a company with a strong track record in its core markets and whilst we will be entering a period of economic austerity we believe that there will still be a requirement for a quality service."
-ends-
Date: 04 October 2010
For further information please contact:
Waterman Group plc City Profile
Nick Taylor, Chief Executive Jonathan Gillen
Alex Steele, Finance Director Simon Courtenay
020-7928-7888 020-7448-3244
web: www.watermangroup.com
CHAIRMAN'S STATEMENT
The last year has been particularly challenging for Waterman Group as we have responded to the extreme and protracted downturn in the private sector which has affected our business worldwide. Effective measures have been taken to protect the long term future of the company as our workload reduced. Shareholders should be aware that in making these changes, your Board has had to balance the need to reduce costs while maintaining the skills base for our future. Inevitably, margins and short term profitability have been impacted. But, across the Company, we are focused upon growth. Property leases take time to unwind, however I am glad to report that, over the near future, a considerable amount of surplus office space will be released. This alone will begin to return the Group to a more normal level of profitability.
Results
In the year to 30 June 2010, Waterman Group achieved a revenue of £83.2m (2009: £122.4m). Pre tax profit was £0.6m before provisions of £5.6m for exceptional items which resulted in a statutory pre tax loss of £5.0m (2009: profit of £2.6m)
The exceptional items are for the following:-
·; In Ireland, the write off of irrecoverable trade receivables and unbilled amounts on contracts related to clients affected by the depressed economy and lack of progress on the release of NAMA (National Asset Management Agency) funding to support developers.
·; In the UK and Ireland, the write off of the cost of unused office space, which is the result of the rationalisation of regional offices and the integration of teams from Boreham, a company the Group acquired three years ago, into our Waterman offices following the end of their earn out period.
·; In Poland, Belgium and Romania, the write off of irrecoverable trade receivables, unbilled amounts due on contracts, goodwill, assets and the cost of unused office space.
Funding
During the year, the Group has made working capital management a priority. Net debt has been reduced to £6.4m (2009: £10.2m) and the Group debtor days have reduced to 91 (2009: 109). Effective working capital management has remained a priority and strict financial controls have been implemented. As a result all the senior management teams are focused upon the need to maintain a tight financial discipline and a strong approach to risk management.
Cash and cash equivalents at the year end amounted to £4.9m. Our principal bank loans are on quarterly repayment terms through to 2017. In addition, we have mortgages on one of our two property assets in London and Leeds and repayments will continue until 2021. In August 2010, our main bank, HSBC, waived the requirement for a covenant test at 30 June 2010 and 31 December 2010 following agreement to the provision for the exceptional items.
Strategy
Prior to the global recession, we were part way through our strategic plan for diversification of the business both through geographical spread and increased engineering specialisms. Our vision was to become "international consultant of choice" for our clients and employees and to achieve this by sustainable growth through a process of organic expansion and selective acquisitions.
Clearly, the world has experienced a period of turmoil and the markets we operate within have changed considerably. As a result, our structure has had to evolve. We have made good progress on legacy issues and most of the action which was required has been taken. Inevitably, this had led to a number of departures from the Group. This is regrettable but action was needed to rebase Waterman for its future. Another important cost reduction has been to reduce the scale of our property infrastructure.
Beyond cutting costs, we adopted an interim strategy, which can be described as 'proactively defensive'. While cost reduction was needed, decisions have been made with the aim of protecting the long term shareholder value. We have re-aligned our employee numbers to be more in balance with predicted workload. In some instances, we have retained core skills and this has affected profitability in the short term. However, this investment is, we believe, necessary in order to preserve our strong reputation and to provide professional services in markets where we anticipate future recovery and growth.
We have rationalised our offices to provide better communication and to make our operations more efficient. IT plays an increasingly important role in the business since it is helping us to manage our workload and increase utilisation. Where possible, we have moved work between offices to provide revenue for our operations in locations where workload on local projects have been impacted by the recession. Looking to the future, advances in technology provides an interesting opportunity for us to improve efficiency, build margins and restore profitability.
Our aspiration is to "stand out from the crowd" in the markets in which we operate. Our original vision to be "international consultant of choice" for our clients and employees is still our objective. However, we will be more focused on geographical areas where we are already established or where we can provide a consultancy offer which is different from our competitors.
Our strategy for long term growth is to focus upon four hub regions and to maintain a number of satellite offices in key geographical locations. This combination will provide us with the opportunity to focus upon improving utilisation while maintaining client relationships and our market presence.
The UK, which contributes a high proportion of our revenue, is a significant hub for the Group. While the market may remain subdued in the near future we are confident that it will return to growth. For example, The City and West End of London are short of major office developments and there is encouraging progress by a number of developers who are starting projects. Waterman is one of the leading firms in London and this recovery will be important while the public sector is downsized. Other markets such as infrastructure and power will also recover since, as a growth economy, the UK has to have a transport system and energy supply which aids business.
Overseas, our resources are being re-focused into three main international hubs which are Australia, Middle East and CIS. Europe will be managed by our UK and Irish operations. Our India office is currently providing outsourcing resource for our UK operations as well as providing opportunities in the local market. It is central to our strategy as particular offices progress, that we build resources to support that growth.
Eighty per cent of our revenue is from the UK and Australia and our future growth will be primarily aligned with the technical excellence and professional relationships built up over many years by our teams in these countries. Our strategy to drive overseas growth will be to increase the leverage of the skills and resources within our established UK and Australian hubs.
People
Our utilisation rates have been lower than forecast during the financial year and we have continued to review the alignment of our resources with our anticipated workload. This has resulted in employee numbers decreasing from 1494 to 1216 over the period, with an associated one off charge of £0.65m being absorbed within our declared profit for the financial year.
In early 2009, we consulted with our employees and agreed a voluntary reduction in salaries of 10% or more across the majority of the business. During 2010, we have partially reinstated salaries where prospects and profitability have improved within our business sectors. I would like to thank all staff for their agreement in accepting salary reductions to support the company. In the next financial year, the increased salary costs will potentially lower margins. However, it is vital that we maintain the goodwill of our staff and continue to invest in them, as our main asset.
Change in Ownership of Waterman Emirates Pty Ltd
On 3 November 2009, Waterman Group became owner of 100% of the share capital of Waterman Emirates Pty Ltd. Previously, 20% of the share capital of Waterman Emirates Pty Ltd was held by a minority shareholder.
Property
On 24 November 2009, Waterman Group completed the sale of a 580m2 freehold office property in Southwark, London which was surplus to requirements for £1.57m. The property was revalued in 2004 upon the introduction of IFRS and a small profit has been recognised over its IFRS book value.
Waterman Group owns two further properties in London and Leeds and these are both fully occupied by the company.
Dividend
The Board is proposing to pay a final year dividend of 0.9p per share (2009: 0.9p) payable on 11 January 2011 to shareholders on the register on 17 December 2010. This final dividend, with the interim dividend of 0.9p which was paid on 31 March 2010, makes a total dividend for the year of 1.8p (2009: 2.2p).
Outlook
Following the actions taken over the last year, we have positioned the business for emerging opportunities in our core markets. I would add that this has been achieved without recourse to shareholders for additional funds, indeed net debt has been reduced, and while maintaining key client relationships.
Our strategy for profitable growth is three fold. On one level we will continue to focus upon removing costs which do not produce long term value. The reduction of our property leases will, we estimate, improve our profitability by at least £1.7m progressively on a full year basis by the end of 2011/12. A second objective is to align resources with future workload. Coupled with this is the need to return each of our business units to profitability and to capitalise on the investment we have made in senior management. It is they who maintain our client relationships, provide our technical excellence and generate opportunities. Client relationships remain central to a people business like Waterman.
The third and most important objective is to return to revenue growth. We are witnessing some positive signs of private sector development schemes returning with new commissions on projects. This will result in fee income and profit in the next two years. London is already short of major schemes moving forward. In the UK public sector, uncertainty remains about the extent of government spending reductions and the possible impact on our revenue.
Looking to overseas growth, we have targeted those regions and sectors where Waterman has a highly competitive position. Our hub strategy has the advantage of maintaining client facing staff while allowing utilisation to be improved.
We look to the future with a renewed degree of confidence, albeit with our usual element of caution. Management has taken most of the action required to return your company to a more normal level of profitability. In terms of growth, Waterman is a well respected firm and, as both the UK and international economies recover, we expect to win a good flow of work from clients who have retained us over many years. On behalf of the Board, I would like to thank them for their support and look forward to continuing the relationship into the future.
Finally, I must thank the staff at Waterman. Their commitment and professionalism has been first class during these most demanding times.
Roger Fidgen
Chairman
04 October 2010
Operational Reviews
Waterman operates within the UK in four segmental profit centres based on the following engineering disciplines which provide 69% of the Group revenue:-
Civil and Transportation
Structures
Building Services
Energy, Environment & Design
Each engineering discipline works in a range of sectors in both the private and public markets. Professional advice and designs provided by the Group range from planning consultancy such as environmental impact assessments and transportation studies, through to detailed design and facilities management.
Overseas, we operate in each country as a multi-discipline business, providing a range of services to a multitude of sectors. Work is generally in the private markets, although in Australia and Ireland we are also involved in the public markets.
Civil & Transportation
Waterman's civil engineering and transportation businesses have been working on projects in the rail, highway, transportation, public sector, power, waste and energy markets.
Consultancy framework agreements continue to provide a significant proportion of the workload and it is anticipated that this will continue in the coming year especially in the waste, energy and transport markets.
Rail
Waterman continues to be involved in a range of rail projects in London and the South East. Work has just been completed for major infrastructure works at Kings Cross station in London for joint clients Network Rail and Argent. Waterman has subsequently been appointed on the first stages of the Royal Arsenal Woolwich Crossrail station box for Berkeley Homes where 'GRIP 4' work has been successfully completed and follow on work has been secured.
Transport for London (TfL) has appointed Waterman for a four year consultancy framework for the provision of civil, structural and M&E engineering services and project management services specifically for Railway Engineering Assets, such as stations and depots.
As part of a national business improvement plan, Network Rail has commissioned Waterman to provide civil and structural engineering design on a new National Centre for 3,000 staff. It is being designed to maximise future flexibility of uses and is located close to Milton Keynes railway station.
Waterman's AutoRail™ asset database is widely used by the rail industry and continues to be developed to meet the changing needs of Network Rail, train operating companies and rail contractors.
Highways and Transport
Under the Project Support Framework agreement with the Highways Agency (HA), Waterman has carried out a number of major consultancy commissions in addition to the supply of up to twenty project and programme management staff to HA regional offices.
As part of the framework, Waterman is working with the HA to progress a major £110m Managed Motorway scheme from J18 to J20 of the M62 Motorway. The project incorporates Active Traffic Management (ATM) and hard shoulder running and has progressed to the design development phase.
Waterman continues to have a successful partnership with Dudley MBC and is working on the £12m Burnt Tree Island Junction Improvement Scheme in the West Midlands which is now under construction.
Thetford SUE (Sustainable Urban Extension) is a proposed residential and commercial extension immediately adjacent to the urban area north of Thetford. Waterman is assessing the impact to the A11 and the road network within the town to provide proposals for the necessary upgrades.
Transportation and Development Infrastructure
Work has re-commenced on the £500m Eastgate development in Leeds for Hammerson. The project is a major city centre regeneration scheme comprising retail, office, gym and medical centre. Waterman is providing environmental, transport and flood risk assessment as part of the planning application and will be undertaking civil and structural design services on the scheme.
Master planning studies, especially for major overseas projects, are contributing to an increasing workload. Flood risk assessments and associated sustainable drainage design remain a key element of development and infrastructure planning and the company is a leading provider of these services, constantly developing new solutions to meet the increasing demands of challenging legislation.
Construction commenced in April 2010 on the £40m Manufacturing Technology Centre at Ansty Park, near Coventry. Waterman is providing full multi-disciplinary services on the project and has been novated to the Design and Build Contractor. The building will be approximately 12,000m2 with provision for 50% expansion and will be used for the development of advanced and innovative manufacturing techniques linked to the aerospace market. The development is targeted to BREEAM excellent standard utilising the BRE Green Guide to Specification.
Waterman has remained active within the residential market. Projects at design stage include the 500 unit Tithe Park scheme in Southend for Lansbury and a mixed use scheme in Castle Donnington for Miller Homes and Clowes Developments including 1,000 residential units. Projects at planning stage include a 300 home development in the Green Belt in East Tilbury, Essex for Cordea Savills and a development for Bellway Homes in Cuckfield.
Tesco remains a major client in the retail market and Waterman has continued to provide specialist transport advice on new and existing stores. Projects have included new superstores in Gillingham, Fareham, Carluke, Kirkwall and Amesbury. The company is also advising on a large number of the
smaller format stores and improvements to the traffic management for existing Tesco stores throughout the UK and Ireland.
Public Sector
.
Waterman's many framework agreements with councils and other public sector agencies continue to provide a significant workload. Work ranges from small scale design and transport planning projects to larger master planning and public realm work. Waterman is currently working for a number of local authorities in the North West on bridge and structural inspection contracts.
Waterman has recently completed a district infrastructure study for Horsham District Council (HDC). The study is one of the key components to assist HDC in its review of the Local Development Framework Core Strategy ('the Core Strategy Review'). It provided a database on future infrastructure requirements to assist HDC in making decisions on the deliverability of growth and the development of the preferred strategy for the district to 2026 and beyond.
Through its strategic intermediary relationships the company continues to source new project commissions for an array of public realm design and master planning projects. This includes the redevelopment of Attercliffe in Sheffield and the second phase of Neptune Developments' £60m regeneration of New Brighton seafront for Wirral Metropolitan Borough Council. Waterman has been appointed by Bradford Metropolitan District Council for the regeneration of Bradford-Shipley Canal Road Corridor.
Secondment Services
The Group's provider of secondment services, Waterman Aspen, delivered a turnover and contribution ahead of budget for the financial year. This performance was despite a severe hardening of its core public sector market in the final quarter.
The company continues to work on a number of strategic frameworks and during the year was appointed on a four year framework agreement for Transport for London, covering traffic management services and the supply of contract staff.
The public sector will be under pressure for some time and at present new secondments in this market are difficult to achieve, pending the results of the comprehensive spending review due in October. It is hoped that the company's non-reliance on capital projects will enable the expertise of its workforce of over 200 to continue to be deployed in support of its traditional public sector clients.
In addition, the stated aims of the new government in downsizing the public sector are likely to present opportunities for the company as roles and responsibilities are outsourced to the private sector.
The company is actively pursuing secondment opportunities in new markets, particularly power and energy and it is anticipated that these will provide increasing workload during the coming financial year.
Power, Waste and Energy
Workload in the power, waste and energy markets has continued to increase. Transport planning services have been in demand for the waste and renewable energy markets with key projects including the Energy from Waste (EfW) and Materials Recovery Facility at Rookery South Pit in Bedfordshire for Covanta Energy; the provision of traffic and transportation advice for the new Kibworth recycling facility in Leicestershire; and input to the Bedford & Luton waste strategy plan.
The company has secured wind farm projects for Energiekontor, IMS Windpower, Peel Energy, RES Group and Nuon Renewables on projects including Asfordby Wind Farm, Leicestershire and Lillyhall Wind Farm, Cumbria. Waterman has also been commissioned via its strategic partner, Keppie Planning, on the progression of six wind farms across Scotland.
Waterman has a framework agreement with Scottish and Southern Energy for the provision of civil engineering consultancy services and has been appointed on the North of Scotland transmission network upgrade. This includes improvements to five substations, the civils works associated with the 400kv Beauly to Denny project and the new dc connection from the Western Isles to Beauly. The framework is expected to provide significant workload for the next two to three years.
The power team continues to assist many of the UK power companies to maintain and improve power generating plants. This expertise is also being used in the planning of replacement generating capacity and it is hoped that projects will be progressed in the latter half of this financial year.
Health and Safety
Waterman Health & Safety provides consultancy services to clients in the public and private sectors, and also acts as Waterman Group's health and safety advisor.
CDM co-ordinator services form the most significant proportion of Waterman Health & Safety's revenue. As this service is an integral part of the construction industry, the market for these services has hardened. However, the division continues to perform well as it has a number of long term commissions in the healthcare sector and new framework agreements have been added during the year.
It is anticipated that the improving building sector market will result in an expansion of the division's workload during the next financial year.
Structures
Waterman's structural business has maintained a consistent performance during the year, meeting its financial targets despite the uncertainty in the UK building sector due to the poor economic climate.
The implications of the public sector spending cuts are still to be determined and the full effects will not be clear until after the October public spending review. However, there has been an increase in private sector building activity. Levels of enquiries for new projects and commissions for feasibility and planning application work are encouraging and Waterman is well placed to take advantage of any economic improvement in the coming year.
Urban Regeneration
Waterman's structural, civil and environmental teams have continued to advise on the 200,000m2 retail led Eastgate development in Leeds, for which a new planning application is expected to be submitted in the near future. Initial feasibility studies on the 100,000m2 Westgate development in Oxford have recently commenced. During the year, work has been undertaken on a new planning application for Worthing Gateway, a 95,000m2 mixed use development adjacent to Worthing Station. The project involves structural, building services, environmental and specialist traffic and transportation input and Waterman is currently providing input for the forthcoming planning application. Station Hill, a mixed use scheme in Reading, for Sackville Developments (Reading) Ltd has received planning approval and Waterman is currently awaiting instructions to commence the next phase of design.
Residential
Joint venture clients Grosvenor and Native Land's NEO Bankside development is under construction adjacent to Tate Modern in London. Waterman Structures has been appointed for another striking Rogers Stirk Harbour + Partners designed riverside development, this time for client St James. Tideway Wharf, Battersea, which comprises six new blocks ranging from 12-20 storeys, will provide 780 new apartments and a hotel.
Student accommodation remains a buoyant sector for Waterman. Structural teams have been involved in the design of a number of developments in central London. NIDO at Spitalfields for Blackstone is a 34 storey tower providing over 1,000 high quality student apartments and is nearing completion in 2010. For Unite, 233 student apartments were completed in Southwark in June 2010 and a further 325 apartments are under construction in Holloway Road. Further new commissions include a 500 bed development at Winchester University for Osborne Developments and a 170 bed development at Bentley House, Euston for the Wellcome Trust.
Retail
In August 2010, work recommenced on the 93,000m2 Trinity Leeds retail and leisure development for Land Securities. The £350m scheme, due to open in 2013, will comprise four levels of retail, three of which interface with the adjoining streets. Further ongoing appointments include: new stores for
J Sainsbury at Nine Elms and Wandsworth, both of which have large residential components; work with Tesco on the Express roll-out programme and further new Tesco stores; a number of new stores and extensions for Wm Morrison Supermarkets in the North and Midlands.
Industrial
The Laing O'Rourke Advance Pre-cast Concrete Manufacturing Facility at Steetley, Nottinghamshire was completed in February 2010. Waterman provided full multi-disciplinary engineering services.
Work on a major new electricity substation in Edinburgh at Dewar Place has made considerable progress this year. The relationship established with client Scottish Power led to Waterman being invited to participate in a group wide framework agreement and it is anticipated that this will create further opportunities. This project also provides a development opportunity above the substation and work on the 50,000m2 commercial scheme concept has made progress in 2010.
Commissions have continued with appointments on behalf of Princes Foods at sites in Cardiff, Eden Valley and Bradford where it is expected the new production building will be instructed following the feasibility study. A number of new process lines have been commissioned for Coca Cola Enterprises at Abbeywell and Edmonton.
Commercial
Waterman has been appointed by The Crown Estate to provide design services on its major developments in the Regent Street and St James's area of London. Quadrant 3 is the redevelopment of the former Regent Palace Hotel into circa 40,000m2 of retail, commercial and residential space. The largest and most prestigious development of The Crown Estate, it is currently ahead of programme with completion due in late 2011. Quadrant 2 is the refurbishment of an existing building adjacent to the Café Royal and is due to commence on site shortly. Block W4 (155-167 Regent Street) and block W5 (169-181 Regent Street) are retail / commercial blocks due for redevelopment with a total development area of 40,000m2 and planning permission for Block W4 has recently been granted. Gateway is a 30,000m2 retail / commercial / residential block at Piccadilly Circus, with retained façades and totally new structural framing. Demolition is anticipated to commence shortly with the new construction during 2011.
Waterman has been working on the design of a new National Centre for Network Rail at Milton Keynes where planning work was completed in 2010 and construction work is now being progressed. The new Ordnance Survey headquarters in Southampton for Kier Property is advancing well on site.
Waterman is appointed on a number of projects in central London which are at planning stage. Work has re-commenced for Land Securities on a site at Hillgate and Ludgate where a 40,000m2 development is proposed.
Detailed design work is being carried out on 8-10 Hanover Street, London, a new development of high quality offices and residential units for CORE. Waterman is also providing structural and building services design on a new, 14 storey 22,000m2 office building at Bevis Marks for CORE/ Monteverde Group. The design incorporates reuse of the piled foundations and it will be one of the largest schemes in the City of London to adopt this strategy. Detailed designs are being finalised on 8-10
Moorgate which is a mixed-use City office development for Schroeders / Stanhope, involving the construction of new high quality space behind retained facades to Moorgate and Tokenhouse Yard.
Also in the City of London, Waterman is at the early design stage for two corporate headquarters buildings. At Finsbury Circus, designs are being developed for CORE and Union Investment Real Estate for a 20,000m2 major refurbishment including facade replacement, additional storeys and internal modifications. Structural and fire engineering monitoring design services are being provided for UBS on a 70,000m2 new building at 5 Broadgate.
Waterman continues to be involved in fit-out works for several landmark buildings across London including: 125 Old Broad Street (formerly London Stock Exchange) for various tenants including DTZ, Watermark Place (now renamed as Angel Lane) for Nomura Bank, Ropemaker Place for Markit and Macquarie, and 1 Finsbury Circus for Stephenson Harwood.
Waterman has been retained under framework agreements to provide structural advice on major London estates for both landlord and tenant modifications and maintenance strategies. The estates include The County Hall - Riverside Building on the South Bank for Metropolitan Estate Management Services Ltd and the Tower 42 Estate for the Tower Partnership.
Hotels
Construction work with Galliford Try has commenced on the 4 star Crown Plaza Hotel at Heythrop Park Complex, Chipping Norton, near Oxford and the project also involves the refurbishment of part of the existing country park hotel.
A number of additional hotel projects are also progressing at the planning stage such as a new hotel for Festival Inns in Edinburgh.
Healthcare
Healthcare projects in London include the £15m paediatric extension to the Chelsea and Westminster Hospital, which has progressed to site and Waterman has been appointed onto the framework agreement at Homerton Hospital. Construction is underway on the Community Hospital at Selby which combines with a new civic centre. In Derbyshire, Waterman has been appointed on an extension to the Bramble Lodge residential home near Ilkeston.
Education
The Building Schools for the Future (BSF) programme was curtailed due to the government's review of capital spending. Waterman had been appointed on commissions in Luton, Essex and Kent which were cancelled. However, Waterman is in the early stages of design at Birmingham BSF where Heartlands Academy has been allocated future funding. BSF projects already underway and for which future funding has been confirmed include Middlesbrough BSF, where three secondary special schools are in construction and a further community college is in detailed design and Tameside, where seven new schools are either being designed or under construction.
Outside nationally funded programmes, Waterman is working on the design of a number of schools in Hainault and Redbridge as part of a local framework agreement. Two schools have been designed and two more remain in the development pipeline with design expected to commence in late 2010. Waterman is also designing a new media centre for Manor CE School in York.
As a result of its outstanding contribution to the successful delivery of the extensions to Parkside School in Bradford and Prince Henry School in Otley, Waterman was awarded Consultant of the Year 2009 by Willmott Dixon Construction.
New build works for the Learning and Skills Council (LSC) funded Leyton Sixth Form College have been successfully completed. Waterman is now designing the refurbishment works for the retained buildings on the campus.
In Scotland, the Scottish Futures Trust has issued its first PPP/PFI Expression of Interest through Renfrewshire and Midlothian Council and Waterman is collaborating on contractor led opportunities for these works. Design is proceeding on Port Glasgow Joint Campus for two secondary schools on a single campus and works have recently completed as part of the West Lothian Council PPP for three secondary schools.
Government and Defence
The new 10,000m2 Westminster Magistrates Court at Marylebone Road, London for Laing O'Rourke is nearing completion.
Building Services
Waterman's building services company has been working on a variety of public sector projects in the year, especially in health and education. Although these enquiries have been reduced due to government fiscal policy, the company has retained a strong position in the London commercial sector, which has offset this trend.
Sector based marketing has indicated that the commercial sector in London is improving and there is movement in the retail and residential sectors, where an increased workload is anticipated for the year ahead.
Sustainability and Low Energy
Waterman's specialist skills in green building design are utilised on all projects. During the year, Waterman completed the Audi Dealership in Croydon, the first building of its kind in the UK to be awarded a BREEAM Excellent rating. The VW Group is now targeting this rating for all of its new Audi showrooms. The Royal Oldham Hospital has also achieved a BREEAM Excellent rating and Loreto Sixth Form College in Manchester was named as one of the sixteenth most successful sustainable buildings at the 2010 BREEAM Awards. The project was funded by the Learning Skills Council and won the BREEAM Further Education award. One Watermark Place in London, a commercial office scheme, was shortlisted in the Sustainability Awards 2009 for the Sustainable Project of the Year. Waterman is committed to the protection of the environment and sustainable design using renewable energy systems is a feature of its projects.
Education
The focus of the education business continues to be via the City Academy and Building Schools for the Future (BSF) programmes and local authority schools generally. Waterman is designing the new £18m Heartlands Academy for Bovis Lend Lease and has been appointed for St Albans Academy, both within the Birmingham BSF programme. Design is underway on Fir Vale School and Owler Brook School for the Sheffield BSF programme. Waterman has been appointed by Willmott Dixon for a new £5m HealthTec Building in Walsall, which is the first purpose-built health education learning facility in the UK. Chelsea Academy, part of the academy framework, is due for completion in September 2010. The £30m school in the heart of Chelsea will welcome 800 pupils when it opens. Work continues on several schools in East London which are due for completion in June 2011: Leyton Sixth Form College, Newbridge Special Needs School, Hainault Secondary Modern School and Harpley School. Swanlea and Morpeth Schools in East London are under construction as part of the Tower Hamlets BSF Programme and the £15m Fulwood Academy in Preston has been approved for construction as part of the Lancashire BSF programme.
Healthcare
Projects in the healthcare sector have progressed with new medical centres completed in Birkenhead Chesterfield for LSP Developments and a GP owned partnership in Solihull. The recently completed Freshney Green Primary Care Centre in Grimsby, for LSP Developments, was named Healthcare
Property of the Year at the Health Investor Awards 2010. New commissions have been secured in Leicester and Alcester for Assura Group and in Westbury for a GP owned partnership.
Commercial
The year has seen a number of new commissions for commercial office developments in London, together with a number of dormant projects restarting.
Waterman has been appointed on a number of major projects by CORE. Building services design is underway at 6 Bevis Marks with a proposed start on site in early 2011. This scheme will deliver 22,000m2 of commercial office and retail space. Waterman is taking the redevelopment of 12-15 Finsbury Circus to planning submission stage in 2010. Design work is in progress on this 20,000m2 office scheme, which is due to start on site in 2011. The redevelopment will include the rationalisation of existing riser and plant space to accommodate an additional storey of office space and improved floor area with new M&E services throughout. Scheme design is underway for the redevelopment of 82 -84 Piccadilly, a 30,000m2 development including commercial office, high quality residential, retail and affordable housing use.
The 8-10 Moorgate project for Stanhope re-started in spring 2010 after being stalled for two years. Waterman is appointed to progress the scheme though to tender with an intended construction start next year. The £45m scheme includes facade retention of the Moorgate elevation as well as a residential building and retail unit.
Massador Establishment Ltd appointed Waterman for the Anchor House redevelopment in London. Full building services design is being provided for the 3,500m2 office scheme which is currently being designed to tender stage.
Further work was carried out on the 240 Blackfriars Road development in London to accommodate the latest requirements of Part L of Building Regulations 2010 and a 12% increase in floor area due to the addition of two floors. The building will now be 20 stories high and become a major landmark on the south side of Blackfriars Bridge.
Waterman is providing building services design as part of a multi-disciplinary appointment for two Land Securities commercial developments - 30 Old Bailey and 60 Ludgate Hill which sit together at the junction of their respective streets. The schemes will provide 40,000m2 of high quality office space plus retail facilities at ground level for 30 Old Bailey and at ground and basement levels for 60 Ludgate Hill. The work has included strategic advice to deliver low energy solutions that improve on the requirements of the 2010 Building Regulations by at least 10%.
The fit out of Macquarie Bank's 20,000m2 building at Ropemakers in London is due for completion in early 2011. Due to the high levels of heat generated, the trading desks will utilise internal desk cooling and this will be combined with high level chilled beams.
Waterman worked with Sir Robert McAlpine to secure the American Express HQ development in Brighton and has now been appointed to provide full design services for the 33,555m2 office / call centre and 3,235m2 data centre buildings. The office building includes staff restaurant, gym and shops.
Retail
The new £25m retail development in Worcester City Centre for joint venture clients Richardson and Carillion has commenced on site and includes a new Asda store, retail units and multi story car park.
Waterman is working with a number of car retailers in the UK. Audi showrooms are being designed for Maidstone and Swindon and refurbishments are being carried out for a Ford showroom in Liverpool and the Mercedes-Benz headquarters in Milton Keynes
Industrial
The 12,000m2 Manufacturing Technology Centre (MTC) at Ansty Park, Coventry is under construction and is programmed for completion next year. The Lang O'Rourke's Pre-cast Concrete Manufacturing Facility at Steetley, Nottinghamshire was completed in February 2010. The construction of the major new electrical substation in Edinburgh at Dewar Place has continued during the year with the potential of a 50,000m2 commercial scheme above.
Government and Defence
Waterman continues to provide building services design to the Aspire Defence Capital Works (ADCW) PFI project, valued at approximately £1.8bn. The team is based at Aldershot and on average 50-70 projects are under construction simultaneously with one building a week being completed. It is predicted that the work volume will remain constant until December 2010 and negotiations for 2011 are underway.
Residential
Waterman has been appointed to provide building services design for the Phase 1 of the €65m redevelopment of the social housing complex at O'Devaney Gardens in Dublin for Dublin City Council. The scheme will include 500 homes, community centre, retail and public space and the regeneration of the area is proposed over 3 phases up to 2018.
Architectural Lighting Design
Waterman's architectural lighting design team continues to work on a diverse range of projects. The government legislation on energy using products and the consequential advance in LED technology continue to have an impact on design criteria. Working in conjunction with Waterman Emirates, the team has been commissioned on the Ibn Hani Bay Resort project in Syria. Projects in the UK include 6 Bevis Marks, 12-15 Finsbury Circus and Anchor House, all in London. The scope of work covers areas such as receptions, lift lobbies, restaurants, plus conference / meeting rooms.
Energy, Environment & Design
Following the integration of the Group's three environmental companies into a single division, Waterman Energy, Environment & Design, the new management team has worked on consolidating the business and positioning it for recovery in the environmental sector. Over the year, the focus has been on the core services and sectors which have contributed to Waterman's strong profile and reputation.
This process has resulted in reduced operating costs and improved efficiency across the business and it is now well placed to take advantage of new opportunities. Work has continued on the innovation of new services and products, with the successful launch of the EnviroRisk Wizard and Carbon Manager in the year, offering exciting prospects for the business moving forward.
Due Diligence and Environmental Management
The economic conditions have significantly impacted on the number of transactions in the UK and internationally and therefore on the level of environmental due diligence advice provided by the team during the first half of the financial year. However, the second half of the year saw a significant upturn in the level of enquiries and appointments, with the team delivering commercially focused due diligence support to a mix of property developers, institutional investors and private equity houses. This leaves Waterman well positioned to take advantage of the upturn in the economy.
A key commission completed in the year was the due diligence assessment of the former RAF airbase at Upper Heyford in Oxfordshire. Following completion of the due diligence stage, Waterman has been commissioned to undertake a number of environmental assessments at the site. Current work includes the investigation of the 13km former jet fuel distribution system and the complex network of former fuel storage tanks and bunkers; the preparation of an Environmental Impact Assessment (EIA); and sustainability appraisal to support the redevelopment of the site for over 1,000 new homes and various employment uses.
A major development for the team was its appointment to provide exclusive environmental risk screening of HSBC plc's commercial real estate lending in March 2010. The EnviroRisk Wizard seeks to provide commercially focused rapid turnaround support to the bank, assisting relationship managers to understand, manage and mitigate significant environmental risks associated with lending. A sophisticated online platform has been developed for the ordering and review of reports and over one hundred and sixty valuation surveyors now use the system.
Greenspace, Waterman's other online product, has held up extremely well during the recession, with over 95% of clients continuing their annual subscription to this bespoke environmental, health and safety update service. The service continues to be used by a wide range of clients including Shell, Petroplus, Britvic, Goodyear, NHS Scotland, Scottish Water, GE, Accenture and GVA Grimley.
In response to growing market and legislative concerns, the service launched its third online application in early 2010. Carbon Manager provides a user-friendly tool to help clients manage, measure and monitor carbon emissions from their businesses.
The team's Director, Anna Bacon, was appointed to the British Venture Capital Association's Responsible Investment Advisory Board in the year. In June 2010, Waterman co-authored the Board's first publication, a guide for private equity houses to help them take first steps to improved corporate social responsibility.
Environmental Assessment
Waterman has continued to secure a steadily increasing stream of urban regeneration and other property related Environmental Impact Assessment (EIA) and sustainability work, despite a contracted market and intense competition.
This includes work for clients taking forward both new projects and revised designs for schemes that already have planning consent. On behalf of Westminster City Council, Waterman is completing an EIA at North Wharf Gardens, a residential led scheme in Paddington Basin, and was retained by Stanhope / Schroders to undertake the EIA of revised proposals for Ruskin Square, Croydon which will deliver approximately 100,000m2 of commercial use and around 500 homes. Waterman was also appointed by Hammerson to complete the EIA of its new proposals for Eastgate Quarters, Leeds providing approximately 125,000m2 of retail, restaurant and leisure uses. Waterman has completed the EIA for Ballymore's new proposals for Leamouth Peninsula, providing around 1,700 new homes. Waterman has also been appointed by Ballymore to provide EIA and sustainability services for its masterplan proposals at Nine Elms.
In Scotland, Waterman undertook the EIA and prepared an Environmental Management Plan for Cruden Estates Ltd's proposals for removal of a colliery spoil heap to create a platform for residential development at Cadzow, Hamilton. Additionally, the EIA was undertaken for the commercial redevelopment of a 230 hectare site adjacent to the M74 at Poniel, South Lanarkshire on behalf of Scottish Resources Group Estates Ltd.
The team has further developed its capability in complex atmospheric dispersion modelling and design mitigation in response to local authorities' intensified concerns over air quality, particularly for new housing in urban areas. The noise monitoring and assessment team has also been expanded.
Waterman's team of experienced licensed BRE assessors has continued to provide a full suite of BREEAM, Code for Sustainable Homes and LEED assessments. Notable projects include Quadrant 3 for The Crown Estate / Stanhope and Ravensbourne College for Bovis Lend Lease, both predicted to achieve BREEAM Excellent. The team is undertaking Strategic Environmental Assessments for the Eastbourne Town Centre Area Action Plan and Selby Site Allocations Development Plan Document on behalf of the Local Planning Authorities.
Brownfield Regeneration
Despite very challenging market conditions, the Land Quality Team has maintained its position as a leading specialist in brownfield regeneration and has received commissions on some of the UK's most technically demanding and challenging projects.
Work has continued on the development of the former Steetley Colliery site in Nottinghamshire. Following successful completion of Phase 1 and construction of Laing O'Rourke's manufacturing facility, the team has been developing a full EIA for Phase 2, together with a Remediation Strategy of the wider Masterplan site. The 85 hectare site comprises a former colliery, quarry, landfill and refractory plant.
Within the education sector, Waterman has been providing land quality and remediation advice on the Middlesbrough Schools BSF on behalf of Willmott Dixon. Further appointments include the Diocese of York Framework Agreement and the provision of land quality, landscape, BREEAM and ecology consultancy services on a major extension to Manor School in York.
New commissions include the Trinity Leeds shopping and leisure development for Land Securities and Laing O'Rourke, together with the next phase of the Hungate York residential and commercial scheme for Crosby Lend Lease, which requires the remediation of one of the UK's first town gas works. Environmental consultancy support is also being provided at Edgewater Park, a 15 hectare residential development of a former factory and foundry for Morris Homes.
Waterman's specialists employ the latest risk assessment techniques and advise on remediation technologies to deliver cost effective and pragmatic solutions in order to reduce environmental liability and maximise value. Such specialist knowledge and skills have been recognised nationally with several senior engineers and scientists achieving IEMA SiLC (Specialist in Land Condition) status.
Ecology, Archaeology, Landscape Planning and Design
Waterman is providing detailed ecology, landscape and archaeology advice to the Berryfields Consortium in the discharge of planning conditions and reserved matters applications for a Major Development Area to the north of Aylesbury in Buckinghamshire. Similar mitigation inputs are involved on Taylor Wimpey's redevelopment of a former asylum in Kent.
Members of the landscape, arboriculture and heritage teams have been involved in the planning submission for a new residential development on a former military oil tank site in Swanvale, Falmouth on behalf of Wainhomes.
The landscape and heritage teams have worked on various Bellway projects in London this year, including sites in Bexley, Hackney and Poplar, to produce combined assessments of townscape and built heritage. The heritage team also supported a successful Conservation Area Consent application at the Poplar site for demolition within an area designated for its 1950s' Festival of Britain architecture.
EIA survey work is being undertaken for various wind farms including one at HMP Standford Hill on the Isle of Sheppey for Partnerships for Renewables and one near Bicester for Ecotricity.
The landscape, ecology and archaeology teams have provided expert evidence at a number of planning inquiries on projects such as a new housing development adjacent to an Area of Outstanding Natural Beauty (AONB) and a new secondary school on greenbelt land north of Stevenage.
International
The international business has had a challenging year as the world economies have struggled to recover from the effects of the financial crisis.
This has affected all offices to a greater or lesser extent apart from offices in Australia and China where workload and profitability have been maintained.
Most offices have suffered from the costs of downsizing, with excess overheads being a financial drag and Waterman now looks forward to a year of consolidation and focus as the markets recover.
Commonwealth of Independent States (CIS)
Offices in Moscow, Russia and Almaty, Kazakhstan share resources on projects in the two countries. Over the last twelve months trading conditions have been particularly difficult as developments continued to be delayed and as a result the staff levels have been adjusted in line with workload.
Scheme design is currently being progressed on Khamovniki, a mixed use residential complex of 444,600m2 in Moscow for Metalloinvest-Development. Waterman is designing a new Marriott Hotel in Krasnodar, Russia and has completed due diligence consultancy advice on the airport hotel at Almaty, Kazakhstan for Radisson.
We have recently been appointed in September for the multidiscipline engineering design of the 100,000m2 French Centre by MAG which is a mixed use development in Almaty, Kazakhstan.
Europe
Waterman's Irish consultancy business, Moylan, has experienced a very challenging year, with both public and private sector capital investment in development works contracting very significantly for the second year in succession. As a result, the business has had to downsize and restructure to align itself to meet current market requirements. A number of the firm's major projects have been deferred in the last year, and provision has been made against outstanding debt and work in progress on these schemes. In spite of the challenging conditions, the company has maintained its core expertise and has increased its share of a much reduced overall market. Work continues on a number of large projects in Ireland and some notable new commissions have been won in the last year.
The infrastructure team has successfully completed the new four platform Clongriffen Railway station in Dublin. Construction has commenced on major urban road and drainage improvement works in Dun Laoghaire. Public sector commissions continue to be won. The company has been appointed to support Dublin city council to carry out a masterplan review and to provide engineering design for Phase 1 of redevelopment works for the O'Devaney Gardens urban regeneration scheme in Dublin. Recent appointments include a new multi-user education campus in Monaghan, a new head office and operations control centre facility at Dublin Airport for Aer Lingus and detailed design work on six major new schools.
In Central Europe, Waterman has offices in Warsaw, Brussels and Bucharest which predominantly work in the private development sector. Following recent concerns about the speed of economic recovery in the region, a provision has been made for irrecoverable trade receivables and unbilled amounts on contracts with clients in Poland, Belgium and Romania. As part of this review, further provisions have been made for the write off of goodwill, assets and office space. In future, projects in Poland and Romania will be managed by Waterman's UK and Irish teams.
Middle East
It has been another challenging year in the Middle East region. Dubai's economic problems have meant that little new work is available there, following the dramatic reduction in construction activity that occurred in late 2008 and early 2009. Whilst several major Dubai developers are making progress in financial restructuring, a return to normal activity in that market will be delayed while the current excess of vacant space built during the boom years is absorbed.
In Abu Dhabi, work is progressing well on the 450,000m2 mixed-use Al Muneera development at Al Raha Beach. Construction work continues, supported by a substantial site-based Waterman team, with completion due in the latter half of 2011.
In the facility management market, major new long term agreements have been confirmed with two key clients. A three year contract has been signed for the delivery of operational and technical management of the region's largest and most advanced data centre for Injazat Data Systems. In addition, a three year Framework Agreement was signed for the ongoing provision of FM and technical support for Abu Dhabi Motorsport Management at the Yas Marina Circuit which hosts the Abu Dhabi Grand Prix and numerous other major motorsports events.
Waterman continued to extend its services beyond the United Arab Emirates (UAE) and into new markets within the MENA (Middle East and North Africa) region. In Sudan, the firm was appointed as infrastructure and utilities consultant to the large mixed-use Al Musheirab project being developed in Khartoum by Qatari Diar. With fewer building projects generally available at present, infrastructure work provides an opportunity to extend services into an alternative and less cyclical sector.
In Syria, Waterman was appointed as the structural engineering consultant by Majid Al Futtaim on its large retail mall project at Sabboura, outside Damascus. The first scheme of its kind in Syria, the project occupies a prime site accessible from three capital cities; Damascus, Beirut and Amman. Design work is expected to continue into the first half of 2011, with construction commencing shortly thereafter.
Also in Syria, Waterman has been appointed on Qatari Diar's large mixed-use Ibn Hani project at Lattakia, on the Mediterranean coast as civil, structural and building services engineers for the design of a range of buildings including residential apartments and townhouses, retail, clubhouse and leisure amenities and mosque. Design of the project will continue into 2011, with construction commencing in early 2011.
Australia
The Australian business has been a significant contributor to Waterman's international operations during the global downturn. Work has mainly been focused on local Australian projects mostly from public sector opportunities.
The Sydney office has done well in a year where economic trends in New South Wales have made for difficult trading conditions. Main areas of activity have been in sectors such as healthcare, education, public housing, court houses, police stations, telecommunications and commercial fit-out. A number of engineering awards were received during the year including, ACEA 2009 Awards of Excellence, AIRAH 2009 Excellence in Sustainability, Australian Master Builders 2009 National Export Award and ATUG 2010 Best Communications Initiative.
New Waterman projects included the new $180m University of Technology Sydney's Broadway Building which will house the Engineering and IT Faculty; Concord Hospital Clinical Services Centre Nurse Training facility; major upgrades for two telecommunication data centres; new transmitter stations for Broadcast Australia replacing the burnt out infrastructure after the 'Black Thursday' fires in Victoria; some large commercial fit out projects; and five new police stations across New South Wales. Waterman was successful in pre-qualifying with the NSW Resitech social housing agency which led to major commissions for social housing projects as part of the Federal Government's stimulus funding package. Waterman has also been successful in securing numerous stimulus funded Trade Training Facilities at schools across NSW.
Waterman's relationship with Sydney Airport FM Group continues to develop with ongoing building services and structural commissions. The company has also pre-qualified with the capital projects group which opens up the potential for further major commissions. This experience has assisted Waterman in winning structural engineering commissions at Brisbane airport.
Waterman continues to provide engineering services for part of a new rail interchange in the South West of Sydney and for a major residential development at Airlie Beach in North Queensland. Successful completions include the Dee Why Grand mixed use development and the major refurbishment of the heritage listed Queen Victoria Building in Sydney.
The Melbourne office has completed another successful year both in terms of securing prestigious new commissions and in completing existing projects. The new commissions are generally in the health and education sectors where the government is continuing to sponsor projects and secondly in the residential sector where there is a demand for new low cost residences. Work is progressing on site on the AU $1.0bn Royal Children's Hospital and the company is also involved in the preparation of the technical brief on behalf of the State Government of Victoria for the new AU $1.0bn world class comprehensive cancer centre to be built in Parkville. Waterman has obtained a 5 star Green Star rating for building services designs at Swinburne University Advanced Technology Centre.
The Brisbane office has seen some tough trading conditions during the year. Despite this, it has managed to complete a number of schools projects, a warehouse and cold room facility, a project for Gold Coast Airport, and an array of small to medium projects. Further work has been secured
including the base building upgrade of a 17 level commercial building at 340 Adelaide Street, Brisbane.
China
China's economy continues to grow and Waterman's Tianjin office has been involved in a variety of projects. These commissions have provided work for our international offices.
Waterman completed its specialist consultancy and site supervision work for the new Tianjin Haihe Bridge and it opened for traffic in July 2010. During the year, the company's role continued as technical advisor for a new waste to energy incinerator project in Tianjin Binhai. This is the first of a new generation of incinerators and is targeted to become one of the lowest carbon profile thermal projects in the country. Further projects in Tianjin include a new 20km2 ecology park and the 60,000m2 Beitang Yuehai hotel and apartments.
India
Waterman's office in Chennai has been established as the outsourcing base for its structural engineering businesses. Whilst this has been the office's primary role since opening in September 2008, it has recently been involved in local projects and in particular a new warehouse facility in Goa.
|
Consolidated Income Statement for the year ended 30 June 2010 |
|
| |
|
|
Notes
| Unaudited Year ended 30 June 2010 £'000 | Audited Year ended 30 June 2009 £'000 |
| Revenue-Continuing operations | 4 | 83,244 | 122,401 |
|
|
|
|
|
| Employee benefits expense |
| (51,472) | (72,487) |
| Other operating charges pre exceptional items |
| (28,434) | (43,632) |
| Exceptional items | 5 | (5,638) | - |
| Other operating charges post exceptional items |
|
(34,072) |
(43,632) |
| Operating expenses |
| (85,544) | (116,119) |
|
|
|
|
|
| (Loss) / earnings before interest, taxes, depreciation and amortisation (EBITDA) |
|
(2,300) |
6,282 |
|
|
|
|
|
| Depreciation of property, plant and equipment |
|
(1,461) |
(1,835) |
| Amortisation of other intangible assets |
| (889) | (923) |
|
|
|
|
|
| Operating profit pre exceptional items | 4 | 988 | 3,524 |
| Exceptional items | 5 | (5,638) | - |
| Operating (loss) / profit post exceptional items |
|
(4,650) |
3,524 |
| Interest payable |
| (560) | (1,256) |
| Interest receivable |
| 166 | 318 |
|
|
|
|
|
| (Loss) / profit before taxation |
| (5,044) | 2,586 |
|
|
|
|
|
| Taxation credit
| 6 | 657 | 188 |
| (Loss) / profit for the financial year from continuing operations |
|
(4,387) |
2,774 |
|
|
|
|
|
| (Loss) / profit attributable to Equity shareholders
|
|
(4,614) |
2,517 |
| Profit attributable to Minority Interests |
| 227 | 257 |
|
|
|
|
|
| Basic (loss) /earnings per share | 7 | (15.1p) | 8.6p |
| Diluted (loss) / earnings per share | 7 | (15.1p) | 8.5p |
| Dividend paid per share | 8 | 1.8p | 5.1p |
| Proposed final dividend per share
| 8 | 0.9p | 0.9p |
Included within amortisation of other intangible assets is a charge of £515,000 (2009: £494,000) in
respect of acquired intangible assets, a non-cash item. The write back of this expense and the exceptional charge of £5,638,000 would, after taxation, reduce the basic loss per share by 14.5p to 0.6p (2009: 9.8p) and diluted loss per share by 14.5p to 0.6p (2009: 9.7p)
| Consolidated Statement of Comprehensive Income for the year ended 30 June 2010
| Unaudited Year ended 30 June 2010 £'000 | Audited Year ended 30 June 2009 £'000 | |
|
(Loss) / profit for the year |
|
(4,387) |
2,774 |
|
Other comprehensive income/expense:
Currency translation adjustments Deferred tax credit for the year Share based payments credit Change in valuation of own shares held by Employee Benefit Trust Employee Benefit Trust profit / (loss)
|
|
739 - (111)
(4) 4 |
515 20 (204)
(31) (212) |
| Other comprehensive income for the year (net of tax) |
|
628 |
88 |
|
Total comprehensive (expense) / income for the year |
|
(3,759) |
2,862 |
|
Total comprehensive (expense) / income attributable to - Equity shareholders Total comprehensive income attributable to - Minority interests |
|
(4,336)
577 |
2,490
372 |
|
Consolidated Balance Sheet as at 30 June 2010
| ||||
|
|
Notes | Unaudited 30 June 2010 £'000 | Audited 30 June 2009 £'000 |
|
| Assets |
|
|
|
|
| Non-current assets |
|
|
|
|
| Goodwill |
| 16,483 | 17,290 |
|
| Other intangible assets |
| 1,648 | 2,458 |
|
| Property, plant and equipment | 9 | 10,888 | 13,901 |
|
| Loan and receivables |
| 10 | 10 |
|
| Deferred tax asset |
| 239 | 390 |
|
|
|
| 29,268 | 34,049 |
|
| Current assets |
|
|
|
|
| Trade and other receivables | 10 | 38,182 | 50,987 |
|
| Cash and cash equivalents |
| 4,908 | 6,158 |
|
|
|
| 43,090 | 57,145 |
|
|
|
|
|
|
|
| Total assets |
| 72,358 | 91,194 |
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables | 11 | 22,809 | 31,307 |
|
| Financial liabilities - borrowings | 12 | 7,563 | 4,598 |
|
| Current tax liability |
| - | 326 |
|
|
|
| 30,372 | 36,231 |
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Financial liabilities - borrowings | 12 | 3,720 | 11,753 |
|
| Provisions | 13 | 4,255 | 3,801 |
|
| Deferred tax liability |
| 214 | 781 |
|
|
|
| 8,189 | 16,335 |
|
|
|
|
|
|
|
| Total liabilities |
| 38,561 | 52,566 |
|
|
|
|
|
|
|
| Net assets |
| 33,797 | 38,628 |
|
|
|
|
|
|
|
| Shareholders' equity |
|
|
|
|
| Share capital | 14 | 3,076 | 3,076 |
|
| Share premium reserve |
| 11,881 | 11,880 |
|
| Merger reserve |
| 3,144 | 3,144 |
|
| Revaluation reserve |
| 584 | 1,491 |
|
| Profit and loss reserve |
| 13,331 | 17,308 |
|
| Total shareholders' equity |
| 32,016 | 36,899 |
|
|
|
|
|
|
|
| Minority interest |
| 1,781 | 1,729 |
|
| Total equity |
| 33,797 | 38,628 |
|
|
Consolidated Cash Flow Statement for the year ended 30 June 2010 | ||||
|
|
Notes |
Unaudited Twelve months to 30 June 2010 £'000 |
Audited Twelve months to 30 June 2009 £'000 |
|
| Cash flows from operating activities |
|
|
|
|
| Cash generated from operations | 15a | 3,357 | 6,542 |
|
| Interest paid |
| (686) | (1,003) |
|
| Interest received |
| 166 | 318 |
|
| Tax paid |
| (1,002) | (1,514) |
|
|
|
|
|
|
|
| Net cash from operating activities |
| 1,835 | 4,343 |
|
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
| Deferred consideration paid |
| (425) | (1,250) |
|
| Purchase of other intangible assets |
| (6) | (354) |
|
| Purchase of property, plant and equipment (PPE) |
| (141) | (817) |
|
| Proceeds from sale of PPE and other intangible assets |
| 1,589 | 32 |
|
|
|
|
|
|
|
| Net cash from / (used in) investing activities |
| 1,017 | (2,389) |
|
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
| Share issues |
| - | 32 |
|
| Repayment of borrowing |
| (1,196) | (1,002) |
|
| Repayments on finance leases |
| (53) | (24) |
|
| Equity dividends paid |
| (1,073) | (1,733) |
|
| Purchase of shares by Waterman Trustees Limited |
| - | (359) |
|
|
|
|
|
|
|
| Net cash used in financing activities |
| (2,322) | (3,086) |
|
|
|
|
|
|
|
| Net increase / (decrease) in cash and cash equivalents |
| 530 | (1,132) |
|
|
Effect of exchange rate changes |
|
418 |
498 |
|
|
Net increase / (decrease) in cash and cash equivalents |
15b | 948 | (634) |
|
|
Consolidated Statement of Changes in Shareholders' Equity (unaudited) For the year ended 30 June 2010
| ||||||||
|
|
Share capital £'000 |
Share premium reserve £'000 |
Merger reserve £'000 |
Revaluation reserve £'000 |
Profit and loss reserve £'000 | Total share- holders' equity £'000 |
Minority Interest £'000 |
Total equity £'000
|
| Balance at 1 July 2008 | 2,910 | 11,832 | 2,358 | 1,491 | 16,250 | 34,841 | 1,658 | 36,499 |
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustments |
- |
- |
- |
- |
400 |
400 |
115 |
515 |
| Deferred tax credit for the year |
- |
- |
- |
- |
20 |
20 |
- |
20 |
| Share based payments charge for the year |
- |
- |
- |
- |
(204) |
(204) |
- |
(204) |
| Adjustment in respect of Share Incentive Plan |
- |
- |
- |
- |
(31) |
(31) |
- |
(31) |
| Loss on disposal of own shares | - | - | - | - | (212) | (212) | - | (212) |
| Net income recognised directly in equity |
- |
- |
- |
- |
(27) |
(27) |
115 |
88 |
|
New ordinary shares issued |
166 |
48 |
786 |
- |
- |
1,000 |
- |
1,000 |
| Profit for the financial year | - | - | - | - | 2,517 | 2,517 | 257 | 2,774 |
| Dividend paid | - | - | - | - | (1,432) | (1,432) | (301) | (1,733) |
|
Balance at 30 June 2009 | 3,076 | 11,880 | 3,144 | 1,491 | 17,308 | 36,899 | 1,729 | 38,628 |
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustments |
- |
- |
- |
- |
309 |
309 |
430 |
739 |
| Reserve transfer on disposal of Land and freehold property* |
- |
- |
- |
(1,271) |
1,271 |
- |
- |
- |
| Deferred tax transfer on disposal of Land and freehold property* |
- |
- |
- |
364 |
(364) |
- |
- |
- |
| Share based payments credit for the year |
- |
- |
- |
- |
(111) |
(111) |
- |
(111) |
| Change in valuation of own shares held by Employee Benefit Trust |
- |
- |
- |
- |
(4) |
(4) |
- |
(4) |
| Employee Benefit Trust profit | - | - | - | - | 4 | 4 | - | 4 |
| Reserve transfer on change in ownership of Waterman Emirates Pty Ltd |
- |
- |
- |
- | 80 | 80 | (80) | - |
| Net (expense)/income recognised directly in equity |
- |
- |
- |
(907) |
1,185 |
278 |
350 |
628 |
|
New ordinary shares issued |
- |
1 |
- |
- |
- |
1 |
- |
1 |
| Loss / (profit) for the financial year |
- |
- |
- |
- |
(4,614) |
(4,614) |
227 |
(4,387) |
| Dividend paid | - | - | - | - | (548) | (548) | (525) | (1,073) |
|
Balance at 30 June 2010 | 3,076 | 11,881 | 3,144 | 584 | 13,331 | 32,016 | 1,781 | 33,797 |
*Further detail on the reserve transfer on the disposal of Land and freehold property is disclosed in note 9 of this document.
Notes to Financial Information
for the year ended 30 June 2010
1. General information
The company is a limited liability company incorporated and domiciled in the UK. The address of its registered office is Pickfords Wharf, Clink Street, London SE1 9DG.The company has its listing on the London Stock Exchange.
The preliminary announcement is based on extracts of the unaudited financial statements prepared in accordance with European Union (EU) endorsed International Financial Reporting Standards ("IFRS") and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The principal accounting policies are consistent with prior year.
The preliminary announcement for the twelve months ended 30 June 2010 which does not constitute the Group's statutory accounts as defined in section 435 of the Companies Act 2006 was approved by the directors on 28 September 2010.
The Preliminary Announcement is unaudited and the auditors' report on the Group's financial statements has not yet been signed. The disclosures made meet the requirements of the Listing Rules.
The Report of the Auditors on the financial statements for the year ended 30 June 2009 which were prepared in accordance with IFRS was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. The financial statements for the financial year ended 30 June 2009 have been delivered to Companies House.
2. Basis of preparation
The unaudited consolidated financial information for the year ended 30 June 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority, in accordance with IFRS as adopted by the EU, and in accordance with those parts of the Companies Act 2006 related to reporting under IFRS that the directors expect to be applicable as at 30 June 2010. IFRS are subject to amendment or interpretation by the International Accounting Standards Board and there is an ongoing process of review and endorsement by the EU. For these reasons, it is possible that the information presented in this report may be subject to change.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reported period. Although these estimates are based on management's best knowledge of the amount, events or actions, actual results ultimately may differ from those estimates.
3. Accounting policies
There has been no impact due to the implementation of new accounting standards during the year. Except for the new accounting policy on exceptional items below, all of the remaining accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 June 2009, as described in those annual financial statements.
Exceptional items
Items that are both material and non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial statements are referred to as exceptional items and are disclosed within their relevant business segment within note 4, segmental information.
4. Segmental information
| Year ended 30 June 2010 Consolidated Income Statement | ||||||
|
| Building services £ '000 | Civil and transportation £ '000 | Environmental energy and design £ '000 | Structures £ '000 | International multi-disciplinary* £ '000 | Total £'000 |
| Revenue - total | 8,841 | 38,122 | 6,948 | 13,685 | 16,614 | 84,210 |
| Revenue- internal | (729) | (5,980) | (983) | (2,784) | 9,510 | (966) |
| Revenue | 8,112 | 32,142 | 5,965 | 10,901 | 26,124 | 83,244 |
| EBITDA pre exceptional items | 399 | 1,346 | (703) | 1,185 | 1,111 | 3,338 |
| Depreciation | (90) | (405) | (99) | (104) | (763) | (1,461) |
| Amortisation | (81) | (481) | (39) | (24) | (264) | (889) |
| Operating profit /(loss) pre exceptional items | 228 | 460 | (841) | 1,057 | 84 | 988 |
| Exceptional items | (107) | (555) | (151) | - | (4,825) | (5,638) |
| Operating profit / (loss) post exceptional items | 121 | (95) | (992) | 1,057 | (4,741) | (4,650) |
| Net finance costs |
|
|
|
|
| (394) |
| Loss before taxation |
|
|
|
|
| (5,044) |
| Taxation |
|
|
|
|
| 657 |
| Profit attributable to minority interests |
|
|
|
|
| (227) |
| Loss attributable to equity shareholders |
|
|
|
|
| (4,614) |
| ** Adjusted operating profit / (loss) | 264 | 802 | (841) | 1,057 | 221 | 1,503 |
|
Year ended 30 June 2009 Consolidated Income Statement | ||||||
|
| Building services £ '000 | Civil and transportation £ '000 | Environmental energy and design £ '000 | Structures £ '000 | International multi-disciplinary* £ '000 | Total £'000 |
| Revenue - total | 11,866 | 41,842 | 12,717 | 24,860 | 57,578 | 148,863 |
| Revenue - internal | (530) | (1,832) | (2,737) | (3,710) | (17,653) | (26,462) |
| Revenue | 11,336 | 40,010 | 9,980 | 21,150 | 39,925 | 122,401 |
| EBITDA | 467 | 2,953 | (1,509) | 2,998 | 1,373 | 6,282 |
| Depreciation | (116) | (469) | (130) | (182) | (938) | (1,835) |
| Amortisation | (84) | (507) | (42) | (40) | (250) | (923) |
| Operating profit / (loss) | 267 | 1,977 | (1,681) | 2,776 | 185 | 3,524 |
| Net finance costs |
|
|
|
|
| (938) |
| Profit before taxation |
|
|
|
|
| 2,586 |
| Taxation |
|
|
|
|
| 188 |
| Profit attributable to minority interests |
|
|
|
|
| (257) |
| Profit attributable to equity shareholders |
|
|
|
|
| 2,517 |
| **Adjusted operating profit / (loss) | 303 | 2,319 | (1,681) | 2,776 | 301 | 4,018 |
* The international multi-disciplinary business segment consists primarily of the building services and structures disciplines.
| ** | Adjusted operating profit / (loss) is reported after adding back the amortisation charge on acquired intangible assets of £515,000 (2009: £494,000) and the exceptional charge of £5,638,000 (2009: £nil). |
5. Exceptional items
The following is an analysis of the exceptional items arising within the Group during the period, all of which have been included in the Consolidated Income Statement.
|
| 2010 £'000
| 2009 £'000 |
| Vacant office space | 1,407 | - |
| Work in progress and trade receivable provisions | 3,498 | - |
| Impairment of goodwill and property, plant and equipment (PPE) | 617 |
- |
| Other restructuring costs | 116
| - |
|
| 5,638 | - |
a) Vacant office space: A provision of £1.4m has been made as an exceptional item in respect of vacant leasehold charges primarily made up of rent, rates, and service charges payable by the Group over the remaining lease terms on vacated properties. The Group is actively seeking to sub-let these properties.
b) Work in progress and trade receivable provisions: A provision of £3.5m has been made against work in progress and trade receivable balances in Ireland and Poland.
c) Impairment of goodwill and PPE: Following a review of the value of the assets of the Belgium business, an impairment charge of £462,000 has been made against the goodwill and PPE as the carrying values were considered to be unsupportable by the directors. An additional £155,000 of impairment charge relates to PPE within vacated office space.
d) Other restructuring costs: These relate mainly to redundancy and other restructuring costs within the Polish business.
6. Taxation
Taxation credit for the year ended 30 June 2010 of £657,000 mainly results from current year losses reducing tax payable in prior years.
7. (Loss) / earnings per share
The basic earnings per share has been calculated on the profit attributable to shareholders and based on the weighted average of 30,483,157 shares in issue during the year and ranking for dividend (30 June 2009: 29,402,826).
The fully diluted earnings per share also takes account of unexercised options potentially convertible into new ordinary shares and shares conditionally awarded in accordance with the Long Term Incentive Plan. The calculation is based on a weighted average of 30,483,157 shares during the year (30 June 2009: 29,846,686).
8. Dividends
An interim dividend of 0.9p per share was paid on 31 March 2010. The directors propose a final dividend of 0.9p per share (June 2009: 0.9p per share). The shares will become ex-dividend on 15 December 2010 and the dividend will be paid on 11 January 2011 to those shareholders on the register at the close of business on 17 December 2010.
|
|
|
| Unaudited Year ended 30 June 2010 £'000 | Audited Year ended 30 June 2009 £'000 |
|
Dividends charged to equity in the year |
|
|
548 |
1,432 |
| Dividend per ordinary share paid in year |
|
| 1.8p | 5.1p |
9. Property, Plant and Equipment (PPE)
|
| Land & freehold property £'000 | Plant, equipment & motor vehicles £'000 | Total £'000 |
| Cost or valuation |
|
|
|
| 01 July 2008 | 10,749 | 11,346 | 22,095 |
| Additions | - | 872 | 872 |
| Transfers to other intangible assets | - | (334) | (334) |
| Disposals | - | (50) | (50) |
| Exchange rate adjustments | - | 241 | 241 |
| 01 July 2009 | 10,749 | 12,075 | 22,824 |
| Additions | - | 141 | 141 |
| Transfers from other intangible assets | - | 2 | 2 |
| Disposals | (1,500) | (572) | (2,072) |
| Exchange rate adjustments | - | 152 | 152 |
| 30 June 2010 | 9,249 | 11,798 | 21,047 |
|
|
|
|
|
| Depreciation |
|
|
|
| 01 July 2008 | 272 | 7,036 | 7,308 |
| Charge for the year | 68 | 1,767 | 1,835 |
| Transfers to other intangible assets | - | (279) | (279) |
| Disposals | - | (25) | (25) |
| Exchange rate adjustments | - | 84 | 84 |
| 01 July 2009 | 340 | 8,583 | 8,923 |
| Charge for the year | 65 | 1,396 | 1,461 |
| Impairment charge for the year | - | 300 | 300 |
| Transfers to other intangible assets | - | (24) | (24) |
| Disposals | (33) | (452) | (485) |
| Exchange rate adjustments | - | (16) | (16) |
| 30 June 2010 | 372 | 9,787 | 10,159 |
|
|
|
|
|
| Net book amount |
|
|
|
| 30 June 2010 | 8,877 | 2,011 | 10,888 |
| 30 June 2009 | 10,409 | 3,492 | 13,901 |
On 24 November 2009, Waterman Group completed the sale of a freehold office property. The property was revalued in 2004 upon the introduction of IFRS.
10. Trade and other receivables
Trade receivables net of provisions at 30 June 2010 were £22.2m (2009: £31.9m) of which £13.4m
(30 June 2009: £20.8m) were more than 30 days old but not impaired. These relate to a number of independent UK and overseas customers for whom there is no recent history of default.
Amounts due from customers on long term contracts at 30 June 2010 were £10.8m (2009: £14.6m).
11. Trade and other payables
Trade and other payables at 30 June 2010 were £22.8m (2009: £31.3m) of which £4.8m
(2009: £6.9m) relate to trade payables.
Amounts due to customers on long term contracts at 30 June 2010 were £8.9m (2009: £14.1m).
12. Financial liabilities-borrowings
|
|
| 30 June 2010 £'000 |
| 30 June 2009 £'000 |
| Current |
|
|
|
|
| Bank loans |
| 7,518 |
| 1,141 |
| Bank overdrafts |
| - |
| 2,198 |
| Finance leases |
| 45 |
| 52 |
| Deferred consideration |
| - |
| 1,207 |
|
|
| 7,563 |
| 4,598 |
| Non-current |
|
|
|
|
| Bank loans |
| 3,659 |
| 11,249 |
| Finance leases |
| 61 |
| 100 |
| Deferred consideration |
| - |
| 404 |
|
|
| 3,720
|
| 11,753
|
| Total |
| 11,283 |
| 16,351 |
The Group had term loans totalling £7.2m from HSBC Bank plc disclosed above within Bank loans. The term loans are subject to three financial covenants which are tested half yearly. On 18 August 2010 the bank agreed to waive the requirement for a covenant test at 30 June 2010 and 31 December 2010.
As the waiver was agreed post year end, the term loans have been classified as current at 30 June 2010. The loans will be reclassified as long term loans in the 31 December 2010 interim accounts.
13. Provisions
|
| Liability insurance claims | Group property | Total |
|
| £'000 | £'000 | £'000 |
| At 1 July 2008 | 4,340 | - | 4,340 |
| Additional provisions | 3,682 | - | 3,682 |
| Utilised during the year | (1,094) | - | (1,094) |
| Released | (3,096) | - | (3,096) |
| Discount | (31) | - | (31) |
| At 1 July 2009 | 3,801 |
| 3,801 |
| Additional provisions | 2,214 | 1,392 | 3,606 |
| Utilised during the year | (71) | - | (71) |
| Released | (3,026) | - | (3,026) |
| Exchange rate adjustments | (56) | - | (56) |
| Unwinding of discount | 1 | - | 1 |
| At 30 June 2010 | 2,863 | 1,392 | 4,255 |
Liability insurance claim provisions reflect management's estimate of the likely cost of claims including professional indemnity insurance excesses and has been provided for in accordance with the group's accounting policy. These provisions will be carried forward until the claims to which they relate are agreed and amounts utilised or released as appropriate.
The property provisions relate to rent, rates, service charge and other associated costs relating to properties that are vacant.
14. Share capital
The share capital of the Company comprises ordinary shares of 10p each. Shares were issued during the period at an issue price of 40.0p (2009: 30.0p to 134.1p) and a weighted average share price of 40.0p (2009: 60.5p).
|
| Authorised | Issued and fully paid | ||
|
| No '000 | £'000 | No '000 | £'000 |
|
At 1 July 2009 | 41,000 | 4,100 | 30,756 | 3,076 |
| Issued during the year in respect of the LTIP | - | - | 3 | - |
| At 30 June 2010 | 41,000 | 4,100 | 30,759 | 3,076 |
15. Notes to the Consolidated Cash Flow Statement
| a) Reconciliation of (Loss) / profit for the financial year to cash generated from operations | |||
|
|
|
Unaudited Year ended 30 June 2010 £'000 |
Audited Year ended 30 June 2009 £'000
|
| (Loss ) / profit for the financial year |
| (4,387) | 2,774 |
| Taxation credit |
| (657) | (188) |
| Interest payable |
| 560 | 1,256 |
| Interest receivable |
| (166) | (318) |
| Amortisation of other intangible assets |
| 889 | 923 |
| Depreciation |
| 1,461 | 1,835 |
| Impairment of Goodwill |
| 317 | - |
| Impairment of PPE |
| 300 | - |
| Profit on disposal of PPE and other intangible assets |
| (58) | (7) |
| Shares granted under the Share Incentive Plan |
| - | 116 |
| Share based payments credit |
| (111) | (204) |
|
Changes in working capital |
|
|
|
| Decrease in Trade and other receivables |
| 15,232 | 10,234 |
| Decrease in Trade and other payables |
| (10,534) | (9,316) |
| Increase / (decrease) in Provisions |
| 511 | (563) |
| Cash generated from operations |
| 3,357 | 6,542 |
|
|
|
|
|
| b) Analysis of net debt | ||||||
|
|
|
30 June 2009 £'000 |
Cash flow £'000 |
Other non-cash changes £'000 |
Exchange movements £'000 |
30 June 2010 £'000
|
| Cash balances |
| 6,158 | (1,668) | - | 418 | 4,908 |
| Bank overdrafts |
| (2,198) | 2,198 | - | - | - |
| Cash and cash equivalents |
|
3,960 |
530 |
- |
418 |
4,908 |
| Current |
|
|
|
|
|
|
| Bank loans |
| (1,141) | 1,196 | (7,590) | 17 | (7,518) |
| Finance leases |
| (52) | 53 | (53) | 7 | (45) |
| Deferred consideration |
| (1,207) | 425 | 832 | (50) | - |
|
|
|
|
|
|
|
|
| Non-current |
|
|
|
|
|
|
| Bank loans |
| (11,249) | - | 7,590 | - | (3,659) |
| Finance leases |
| (100) |
| 39 | - | (61) |
| Deferred consideration |
| (404) | - | 404 | - | - |
|
|
|
|
|
|
|
|
| Net debt |
| (10,193) | 2,204 | 1,222 | 392 | (6,375) |
16. Going concern
The group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement. The financial position of the group, its cash flows, liquidity position and borrowing facilities are described in the financial statements and notes.
The group has considerable financial resources together with long term contracts with a number of customers and suppliers across different geographic areas and industries. An analysis of the Group's borrowing facilities are disclosed in note 12 'Financial liabilities-borrowings'. As a consequence, the directors believe that the group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statement.
17. Principal risks and uncertainties
The principal risks and uncertainties requiring critical judgment are in the determination of revenue recognition and the assessment of the percentage of completion achieved on contracts. The group assesses contract progress and determines the proportion of contract work completed at the balance sheet date in relation to the total contract works. Judgments are also made when assessing the adequacy of provisions for potential liability insurance claims and trade and other receivables.
18. Further information
Copies of the Annual Report and Financial Statement are expected to be mailed to shareholders on 29 October 2010. Additional copies will be available from the Company's registered office at Pickfords Wharf, Clink Street, London SE1 9DG. In addition, electronic copies of the Annual Report and Financial Statement will be made available on the Group's website www.watermangroup.com
The directors are responsible for the maintenance and integrity of the Group's website on the internet. However, information is accessible in many different countries where legislation governing the preparation and dissemination of financial information may differ to that applicable to the United Kingdom.