WTM.L Regulatory News (WTM)

7 Oct 2005 07:00

Waterman Group PLC07 October 2005 WATERMAN DELIVERS EXCELLENT PROGRESS Waterman Group plc, ("Waterman"), one of the UK's leading multidisciplinaryengineering and environmental consultancies, today announces its preliminaryresults for the year ended 30 June 2005. Highlights: • Work done increased to £72.6m (2004: £65.0m) • Profit before tax increased to £3.1m (2004: £2.0m) • Profit before tax and goodwill amortisation up to £4.0m (2004: £2.8m) • Basic earnings per share increased to 6.9p (2004: 5.1p) • Basic earnings per share before goodwill amortisation up to 9.8p (2004: 7.8p) • Dividend increased to 5.2p (2004: 4.9p) • NAV increased to 95p per share (2004: 92p) • Substantial long term order book • Acquisition of Quadrant Consulting Ltd • Key international projects continuing in China, UAE, Russia and Australia • Major Urban Regeneration projects continue at: • whitecityTM, West London • The Shires, Leicester • Paradise Street, Liverpool • Broadmead, Bristol • Park Place, Croydon • Eastside, Nottingham • Major advisory work in London at: • Former Stock Exchange Tower • Thames Exchange • 90, Upper Thames Street • The Quadrant, Regent Street • 14-18 Gresham Street Commenting on the results, Bob Campbell, Managing Director said, " We have made considerable progress over the past year which is reflected inthese excellent results. The Group has performed strongly across all sectors,whilst benefiting from more favourable trading conditions. Good progress hasbeen made on a number of the major regeneration projects. We are delighted to beplaying such an active role in many of the UK's largest projects which willprovide a revenue stream for the Group through to 2012. Our international operations have made good progress with major contracts beingsecured in some of the World's fastest growing construction markets includingChina, Dubai and Russia. Waterman has successfully undergone a reorganisation of its operationalsubsidiaries and the benefits are already being seen across the Group. It is difficult to anticipate whether the recent improvement in margins issustainable in the longer term however our record long term order book, strongbalance sheet and good performance reported across all sectors enable us toapproach the future with confidence." -ends-Date: 7 October 2005For further information contact: Waterman Group plc City ProfileBob Campbell, Managing Director Oliver WintersGraham Hiscocks, Finance Director Simon Courtenay020-7928-7888 020-7448-3244web: www.waterman-group.co.uk CHAIRMAN'S STATEMENT I am pleased to report that, in the year to 30 June 2005, Waterman Groupachieved an increased pre tax profit of £3.1m (2004 : £2.0m) on work done of£72.6m (2004 : £65.0m). Basic earnings per share were 6.9p (2004 : 5.1p) and netassets per share stand at 95p (2004 : 92p). The board is recommending an increased final dividend of 3.3p (2004 : 3.0p) pershare which with a maintained interim dividend of 1.9p makes a total for theyear of 5.2p (2004 : 4.9p) per share. Whilst profits have increased at a greaterrate than dividends, the Board also wishes to rebuild the level of dividendcover and retained reserves. The final dividend will be payable on 15 December2005 to shareholders on the register on 18 November 2005. As recently announced, these results represent a significant improvementcompared to last year, due to a number of factors including: projects releasingprofits earlier than expected, the improved performance of the Group's regionaland international companies and a reduction in property costs in London.Currently, all sectors are performing well and the Group continues to secure anexcellent long term order book.Group Activities Multi-discipline consultancy services continue to be provided on some of the UK's largest urban regeneration projects. These include whitecityTM in WestLondon, Paradise Street in Liverpool, Eastgate in Leeds, Broadmead in Bristol,Park Place in Croydon, Shires in Leicester and Eastside in Nottingham. Theseprojects, together with others in the same sector, have an aggregate capitalvalue in excess of £6 billion and will provide income for the Group up to 2012.In London there are further signs of recovery in the commercial and mixed usesectors. The Group is currently advising on more than 20 projects in Londonincluding the former Stock Exchange tower, Thames Exchange and 90 Upper ThamesStreet in the City of London, together with the Quadrant and the Trocadero inthe West End of London. In accordance with its long term strategy the Group has recently completed areorganisation of its operational subsidiaries. The Group's operations have beenreorganised into four key disciplines in the UK with Waterman Group Ireland andWaterman International remaining separate operations. The objective is toachieve greater efficiency, and to provide a premium service to all clients.Further details of the Group reorganisation are shown overleaf. All structural consultancy work in the UK has now been combined into oneorganisation trading as Waterman Structures, which operates UK wide and is oneof the 'top 3' consultants in its field. (1) Major projects are in progress inLondon, Liverpool, Bristol, Manchester, Leeds, Leicester, Oxford and Wigan andin many cases other Group companies are providing specialist services, as partof a multi-discipline package. Current major projects include 125 Old BroadStreet in the City of London, Paradise Street in Liverpool and Tabard Square inSouth East London. Waterman Structures has a substantial long term order book,with projects spanning to 2012. The Group's civil engineering subsidiary, now renamed Waterman Civils, hasexpanded its operations during the year and has been increasingly involved inthe rail, highways and transportation sectors. Projects in progress during theyear include: White City stations and bridgeworks, Moor Street station inBirmingham, Oakham bypass in Rutland and A45 upgrades in the West Midlands. TheGroup's rail mapping database AutoRailTM is being extended to cover the entireNetwork Rail system, and further updates will be undertaken in future years.Waterman Aspen, the Group's specialist outsourcing company, has expanded duringthe year and currently employs 220 staff who are seconded to 90 separateclients, predominantly in the public sector, throughout the UK. This diversitymeans that the business is not over-exposed to any individual client. The Group's three environmental consultancies have all grown during the year andcurrently cover an even wider range of expertise. All major planningapplications now require an Environmental Impact Assessment (EIA) to demonstratethat the environmental effects of a new development are acceptable. Waterman isnow one of the major providers of EIA services and the market is expected togrow rapidly in the future. CPM, the Group's specialist planning and designconsultancy, has advised the Countryside Agency on the new South Downs NationalPark and has also advised on new residential developments in Cambridgeshire,West Sussex and Buckinghamshire. Waterman Sustainable Energy has now completedits second year of operations. During the year it has advised on a number of PFIwaste management projects and is very active in the Biomass and Biofuelprogrammes together with the development of carbon management systems, whichwill significantly reduce fossil fuel CO2 emissions in the years ahead. The Group's mechanical and electrical consultancy, now renamed Waterman BuildingServices, has advised on a number of major projects including whitecityTM, WestLondon where the designs of the stations, infrastructure and the retail centrehave been progressed during the year. Other largeprojects in progress includeEastside in Nottingham and 14 Cornhill in the City of London. Furtherdevelopment work has been completed on the use of advanced 3D design softwarewhich provides effective co-ordination of building services and a comprehensivedatabase as an aid to future facilities management. (1) Source - Construction News In Ireland, the Group's Dublin based consultancy, Moylan, has had another yearof strong growth. Staff numbers have increased to 70 during the year, inresponse to the increasing workload. The company has been particularly strong inthe mixed use development sector in the Dublin area, advising on a number ofmajor projects at the Grange in North Dublin, Pelletstown and Dun Laoghaire. Inaddition, the company is well placed to participate in the Irish Government'smajor infrastructure programme which is expected to provide a significant futuresource of work. The long term order book stands at a record level. Waterman International, which handles all Waterman's work outside the UK andIreland, has continued to make progress during the year. In particular, the newoffices in Beijing and Dubai have been successful in generating substantial newprojects. These include Haithe River masterplan, Tianjin in China and DubaiFestival City in the UAE. China and Dubai are two of the world's largestconstruction markets, offering considerable potential for future growth. InMoscow, where Waterman has been established for 14 years, there is an increasingnumber of new opportunities in the local property market, and the staffing levelhas been increased to 40 in response to greater client demand. In Australia, theGroup's subsidiary, Waterman AHW has advised on Nortel headquarters and KingStreet Wharf in the Sydney area and is leading the Group's engineering teams inDubai. As part of the Group's strategy a structural engineering team has beenadded in Sydney, creating a multi-discipline business. Consultancy advice isbeing given on new projects in Vietnam. During the year the Group has continued to provide consultancy services to anumber of consortia on PFI and PPP projects. These projects include Governmentoffices, schools, hospitals, defence establishments and waste managementprojects. The final phase of HM Treasury building in Whitehall was successfullycompleted in November 2004. Currently, Waterman is advising on ten privatefinance projects, which are expected to provide a significant source of incomein future years. The Group has continued to secure a number of long term framework agreements.Around 40 agreements are currently active for clients which include BritishNuclear Group, Crawley Borough Council, The Highways Agency and SheffieldUniversity. Strategy The Group's strategy is to build on its existing strengths and expertise in itscurrent markets, whilst developing new areas of business which will deliver longterm growth and profitability in the future. Recent new ventures in Dubai andChina have already delivered better than expected results and the recentdevelopment of new Biofuel technology is seen as an excellent prospect for thefuture. The Group plans further expansion through organic growth, supplementedby selective acquisitions of high quality complementary businesses. Acquisitions On 6 April 2005 the Group acquired 100% of the share capital of QuadrantConsulting Ltd, a consulting engineer specialising in the design and managementof civil and structural engineering projects, based in Cardiff. The acquisitionof Quadrant secures the services of a well respected consultancy in Wales whichwill complement the Group's framework agreement with the Welsh Assembly andextends the Group's network of UK offices. Current projects include North Dock,Llanelli and Matrix Park, Swansea. Employee Relations The quality, reliability and commitment of Waterman employees underpins theGroup's reputation and success. The level of repeat business from regularclients is a testament to their respect for the professionalism and reliabilityof our staff. Great emphasis is placed on development and training of all staffin order to facilitate continuous professional improvement both for theindividual and the Group. The Group rewards its staff through a range of salary and benefit packagesincluding free shares in the company. A share option scheme operates to providesenior management with the opportunity to acquire ordinary shares and a proposalto introduce a long term incentive plan will be presented for shareholderapproval at the annual general meeting. Most engineering and environmental disciplines now operate a flexible benefitscheme which enables employees to select from a range of benefits. This newscheme forms an important part of the Group's recruitment and retention strategyand has been well received by staff. We hope to have the opportunity to extendthe range of benefits offered in future years. I welcome this opportunity to thank all members of staff for their valuablecontribution to the success of the Group over the past year. Board Appointments On 4 May 2005 the Group announced the retirement of William Mathieson from thepost of non-executive chairman. The Board is very grateful for the support andleadership that William providedover a period of many years, during which the Group achieved considerableexpansion. Following William's retirement I was delighted to be elected asWaterman's new chairman with effect from 4 May 2005. On 1 July 2005 the Board appointed John Waiting, aged 48, as a new executivedirector, with responsibility for the Group's civil engineering activities. Johnhas considerable experience in the civil engineering sector and his appointmentis in line with the Group's long term succession strategy. Future Prospects The Group's substantial long term order book has been strengthened during theyear and good progress has been made in all sectors. The urban regenerationsector continues to perform strongly and the Group has secured an increasednumber of new commissions for commercial projects in London. We anticipate thatfurther gains in efficiency will be achieved following the reorganisation of theGroup into six distinct operating companies. At this stage, it is difficult to anticipate whether the recent improvement inmargins is sustainable in the longer term. However, having returned to higherlevels of profitability in the last year and with all sectors currentlyperforming well, the Group expects to make further progress in the currentfinancial year. Roger FidgenChairman Group Profit & Loss Accountfor the year ended 30 June 2005 Year Ended Year Ended 30 June 2005 30 June 2004 (unaudited) (audited) Notes £'000 £'000 Work done 72,633 65,019 Operating profit before goodwill amortisation 4,260 2,908 Goodwill amortisation (833) (768) Operating profit 3,427 2,140 Exceptional item -profit on disposal of fixed - 258asset Net interest payable (296) (386) Profit on ordinary activities before taxation 3,131 2,012 Taxation on profit on ordinary activities 3 (1,191) (605) Profit on ordinary activities after taxation 1,940 1,407 Equity minority interests (32) 1 ____________ ______________Profit on ordinary activities after taxation and minority interests 1,908 1,408 Dividends (1,451) (1,362) Retained profit for the year 4 457 46 Basic earnings per share 5 6.9p 5.1p Diluted earnings per share 5 6.7p 5.0p Basic earnings per share before goodwill 5 9.8p 7.8pamortisation 5 9.6p 7.7pDiluted earnings per share before goodwillamortisation Dividend per share 6 5.2p 4.9p Statement of Group total recognised gains andlosses Profit for the year 1,908 1,408 Exchange adjustment offset in reserves 150 (123) Total gains and losses recognised 2,058 1,285 Group Balance Sheetas at 30 June 2005 As at As at 30 June 2005 30 June 2004 (unaudited) (audited) £'000 £'000Fixed assets Intangible assets 10,299 10,340 Property, plant and equipment 12,087 12,084 Investments 10 10 22,396 22,434Current assets Work in progress 1,351 925 Debtors- trade 20,030 17,611- amounts recoverable on contracts 10,757 9,542- other 1,910 1,975 ____________ ______________ 32,697 29,128 Cash at bank and in hand 3,975 3,862 38,023 33,915 Creditors - amounts falling due within one (27,362) (23,418)year Net current assets 10,661 10,497 Total assets less current liabilities 33,057 32,931 Creditors - amounts falling due after more (5,314) (6,809)than one year Provisions for liabilities and charges (1,338) (505) Net assets 26,405 25,617 Capital and reserves Called up share capital 2,791 2,780 Share premium account 11,452 11,423 Merger reserve 2,146 2,110 Profit and loss account 9,312 8,697 Equity shareholders' funds 25,701 25,010 Equity minority interests 704 607 Capital employed 26,405 25,617 Group Cash Flow Statementfor the year ended 30 June 2005 Year ended Year ended 30 June 2005 30 June 2004 (unaudited) (audited) £'000 £'000 Net cash inflow from operating activities (note a) 5,731 5,122 Returns on investments and servicing of financeInterest received 188 88Interest paid (452) (463)Dividend paid to equity minority interest - (50)Interest paid on hire purchase contracts (2) (11) (266) (436) TaxationTaxation paid (782) (519) Capital expenditure and financial investmentPurchase of property, plant and equipment (1,463) (1,044)Proceeds from sale of tangible fixed assets 40 387 (1,423) (657) AcquisitionsPurchase of subsidiary undertakings (1,140) (1,415)(Overdraft) / cash acquired with subsidiary (68) 38 (1,208) (1,377) Equity dividends paid (1,363) (1,360) Cash inflow before financing 689 773 FinancingIssue of ordinary share capital 36 20Receipt of bank loans - 128Repayment of loans (409) (402)Capital element of hire purchase payments (64) (87)Purchase of shares by Waterman Trustees Limited (96) (89)Sale of shares by Waterman Trustees Limited - 91 (533) (339) Increase in cash in the year (note b) 156 434 Notes to the cash flow statement a) Reconciliation of operating profit to net cash inflow from operatingactivities Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000 Operating profit 3,427 2,140Profit on disposal of fixed assets (18) (2)Depreciation 1,469 1,552Goodwill amortisation 833 768Shares granted under the share incentive 104 86plan(Increase) / decrease in work in progress (225) 3,391Increase in debtors (3,275) (8,552)Increase in creditors 2,583 6,128Increase / (decrease) in provisions for 833 (389)liabilities and charges Net cash inflow from operating activities 5,731 5,122 b) Analysis of net debt At 1 Other At 30 July non-cash Exchange June 2004 Cashflow changes movements 2005 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 3,862 101 - 12 3,975Bank overdrafts (512) 55 - 6 (451) 3,350 156 - 18 3,524 Debts due within one year (1,486) 1,297 (1,756) (5) (1,950)Debts due after one year (6,698) - 1,434 - (5,264)Hire purchase due within one (61) 64 (63) (1) (61)yearHire purchase due after one (111) - 61 - (50)year (8,356) 1,361 (324) (6) (7,325) Total (5,006) 1,517 (324) 12 (3,801) c) Reconciliation of net cashflow to net debt Year ended Year ended 30 June 2005 30 June 2004 £'000 £'000 Increase in cash in the period 156 434Net reduction in borrowings 1,039 334Inception of hire purchase leases (2) (18)Exchange adjustments 12 34Reduction in net debt 1,205 784Net debt at beginning of year (5,006) (5,790)Net debt at end of year (3,801) (5,006) Notes 1. The financial information set out above does not constitute the Group'sstatutory accounts for the years ended 30 June 2004 and 2005. The financialinformation in respect of the year ended 30 June 2005 is unaudited. Statutoryaccounts for the year ended 30 June 2004, on which the auditors gave anunqualified report pursuant to section 237 (2) or (3) of the Companies Act 1985,have been filed with the Registrar of Companies. 2. On the 6 April 2005 the Group purchased 100% of the issued share capital ofQuadrant Consulting Limited, a structural and civil engineering consultancybased in Cardiff, S.Wales for a consideration of £369,000. The company wassubsequently renamed Waterman Quadrant Limited. In the year ended 30 June 2005, Waterman Quadrant contributed £199,000 to workdone and £7,000 to operating profit. 3. The tax charge for the year of £1,191,000 represents an effective rate of30.0% on profit on ordinary activities before goodwill amortisation. Profitsearned in Ireland have attracted the low prevailing rate of 12.5%. 4. The movement in retained profit comprises the following: £'000 As at 1 July 2004 8,697Retained profit for the year 457Exchange adjustments 150Adjustment in respect of Share Incentive Plan 6Profit on disposal of own shares 2 Retained profit at 30 June 2005 9,312 5. The basic earnings per share has been calculated on the profit on ordinaryactivities after taxation and minority interest and is based on a weightedaverage of 27,844,927 ordinary shares (30 June 2004: 27,792,927). The diluted earnings per share has been calculated on the profit on ordinaryactivities after taxation and minority interest and is based on a weightedaverage of 28,574,478 ordinary shares (30 June 2004: 28,419,608). The basic earnings per share before goodwill amortisation has been calculated onthe profit on ordinary activities after taxation and minority interest and afteradding back goodwill amortisation of £833,000 (2004: £768,000) and is based on aweighted average of 27,844,927 ordinary shares (30 June 2004: 27,792,927). The diluted earnings per share before goodwill amortisation has been calculatedon the profit on ordinary activities after taxation and minority interest andafter adding back goodwill amortisation of £833,000 (2003: £768,000) and isbased on a weighted average of 28,574,478 ordinary shares (30 June 2004:28,419,608). 6. An interim dividend of 1.9p per share (2004: 1.9p) was paid on 20 April 2005.A final dividend of 3.3p (2004: 3.0p) which will be recommended by the directorsfor approval at the Annual General Meeting. 7. The Annual Report and Accounts for Waterman Group plc for the year ended 30June 2005 are to be posted to shareholders on 29 October 2005 and will beavailable to members of the public from that date from the Group's registeredoffice at Pickfords Wharf, Clink Street, London SE1 9DG. 8. The Annual General Meeting will be held on Tuesday 6 December 2005 at 12.00noon at The Apothecaries Hall, Blackfriars Lane, London EC4. The final dividendif approved will be paid on 15 December 2005 to shareholders on the register on18 November 2005. This information is provided by RNS The company news service from the London Stock Exchange