WTM.L Regulatory News (WTM)

5 Oct 2007 07:00

Waterman Group PLC05 October 2007 WATERMAN BOOSTED BY ORGANIC GROWTH AND ACQUISITIONS IN BOTH UK AND OVERSEAS AS OPERATIONS EXPAND Waterman Group plc, one of the UK's leading multidisciplinary engineering andenvironmental consultancies, today announces its preliminary results for theyear ended 30 June 2007. • Revenue, profit and earnings per share ahead of expectations • 24% increase in revenue to £103.9m (2006: £83.7m) • 24% increase in operating profit before amortisation of acquired intangible assets to £5.7m (2006: £4.6m) • 24% increase in profit before tax and amortisation of acquired intangible assets to £5.2m (2006: £4.2m) • 24% increase in adjusted basic earnings per share to 12.0p (2006: 9.7p) • Dividend per share increased to 5.8p (2006: 5.4p) • 3 earnings enhancing acquisitions completed in the 15 months to September 2007 • Net Asset Value per share up to 112p (2006: 105p) • Strong cash generation from operations Statutory disclosures: • 22% increase in operating profit to £5.6m (2006: £4.6m) • 21% increase in profit before tax to £5.1m (2006: £4.2m) • 21% increase in earnings per share to 11.7p (2006: 9.7p) Commenting on the results, Nick Taylor, Chief Executive said, "I am delighted to report another year of significant success and growth forWaterman Group. Revenue, profit and earnings per share are all at record levels.The Group has expanded organically and by value enhancing acquisitions in keymarkets in the UK and overseas. Our international operations have grownsignificantly during the year and now represent 25% of our turnover." "In the UK, we have diversified our business further within existing and newsectors. Internationally, we have established new offices in Kazakhstan, AbuDhabi and Brisbane. Our long term order book is at a record level and demand forour services in the UK and overseas is strong." "We look to the future with confidence and enthusiasm." -ends- Date: 5 October 2007 For further information contact:Waterman Group plc cityPROFILENick Taylor, Chief Executive Simon CourtenayGraham Hiscocks, Finance Director William Attwell020-7928-7888 020-7448-3244 web: www.waterman-group.co.uk Chairman's Statement In the year to 30 June 2007, I am pleased to report that Waterman Group achievedan increased adjusted pre tax profit of £5.2m (2006: £4.2m) on revenue of£103.9m (2006: £83.7m) and net assets per share stand at 112p (2006: 105p). Theboard is recommending an increased final dividend of 3.6p (2006: 3.4p) pershare. This final dividend, with the increased interim dividend of 2.2p whichwas paid on 19 April 2007 makes a total dividend for the year of 5.8p (2006:5.4p). The final dividend will be payable on 18 December 2007 to allshareholders on the register on 16 November 2007. The Group has continued to achieve considerable growth over the financial yearwith significant progress being made in overseas work. The focus remains onorganic growth combined with strategic acquisitions of high performancecompanies in key business and market sectors. Robert Campbell, who was Managing Director for the last 18 years, retired inJune 2007 and was succeeded by Nicholas Taylor. Bob and Nick have worked closelyover the last 6 months to effect a seamless handover and this has beensuccessfully achieved. The Group can look forward to the future with confidenceas it continues to expand its horizons. Bob is still employed by the Group as aDirector of the Ireland and Belgium operations and I would like to thank him forhis achievements and contribution to the growth of Waterman Group over manyyears. Building Services Waterman Building Services has performed successfully, exceeding targets in bothrevenue and profit. New work is resulting from the Government's policy on energyconservation and local authorities planning policy for sustainability, togetherwith commissions in the education, health and regeneration markets. Workingclosely with other Group disciplines, Waterman Building Services will focus onthese key drivers and this will maintain a healthy forward workload for the yearahead. Civil Engineering The Group's civil engineering companies have met revenue and profit targets forthe year. This has been achieved by maintaining the strategy of strengtheningregional operations as well as securing core civil engineering consultancythrough the development of national framework contracts in the rail, highway andmunicipal engineering sectors. The acquisition of Boreham Consulting Engineersin April 2007 was in line with the Group's strategy to improve transportationplanning services offered to clients. Waterman Aspen continues its engineeringoutsourcing expansion strategy with over 280 engineering staff now placed withprivate and public sector clients throughout the UK. With a substantial forwardworkload, together with Boreham's operations, the Group's civil engineeringdisciplines look forward to increased revenue and profitability in the comingyear. Structural Engineering Waterman Structures, the Group's principal provider of structural engineeringservices has maintained its leading position in the market, providing designservices on many of the UK's largest building projects. These include LiverpoolOne, Cabot Circus in Bristol and Wellesley Square, Croydon. In order to enhancethe range of services offered to clients, Waterman Structures has established anarchitectural engineering division, harnessing the company's considerableexperience in special structures to meet the needs of leading UK architects inthe design of award winning projects. Profits are in line with expectations andthe future order book has strengthened. Environmental Services Strong growth and the achievement of business objectives have resulted in a goodyear for the Group's environmental teams, comprising Waterman CPM, WatermanEnvironmental and Waterman Sustainable Energy (WSE). Significant progress hasbeen made in environmental due diligence and Waterman Environmental is now oneof the UK's leading providers of this service. Waterman CPM has also made goodprogress, with the establishment of teams in several Group offices. The newHarpenden team specialises in delivering landscape architectural services. WSEhas now established itself in the specialist energy and waste sector and hassecured a number of important PFI commissions. Commissioning of Europe's firstsynthetic fuel plant is due to be completed in the next few months and WSE'sspecialist knowledge of these advances in the energy market will stand thecompany in good stead to secure future commissions. International Consultancy International operations have had an extremely successful year reportingincreased levels of activity in all regions. Strong organic growth has beenachieved with the opening of new offices in Kazakhstan, Abu Dhabi and Brisbane.Additionally, the Warsaw office has doubled in size. Revenue has increasedconsiderably and a significant contribution has been made to Group profits.Current major projects include the 450,000m2 Al Muneera project at Al Raha Beachin Abu Dhabi and Europe's tallest building, Rossia Tower in Moscow. Acquisitions On 1 November 2006, the Group's Australian subsidiary, Waterman International(Asia) Pty acquired 51% of the share capital of AHW Consulting Engineers(Victoria) Pty, one of the largest independent building services and structuralconsulting engineers based in Melbourne, Australia. On 20 April 2007, the Group acquired 100% of the share capital of BorehamConsulting Engineers Ltd., a UK based consultancy specialising in transportplanning, development control and transport studies, traffic engineering andinfrastructure design consultancy services. On 1 September 2007, the Group's subsidiary Waterman Building Services Ltd.acquired 100% of the share capital of Furness Green Ltd., a mechanical andelectrical design consultant based in London, Leeds and Nottingham. These earnings enhancing acquisitions are part of the Group's strategy ofexpanding in key markets. Strategy The Group's strategy is to continue to invest in sectors and regions whichdeliver long term growth and profitability. The Group will also continue toconsider the many acquisitive growth opportunities that exist in the UK andoverseas. Waterman has 50 offices worldwide and its strategy is to expand therange of services offered from each of these offices. With wide rangingexperience in all forms of engineering, the Group is particularly well placed toprovide advice on sustainability issues and intends to be increasingly involvedin this expanding market. The Group's planned succession strategy saw the appointment of Nick Taylor asGroup Chief Executive from 1 July 2007. Nick has been with Waterman for over 25years and was previously responsible for its structural engineering business.Waterman aims to communicate more frequently with all stakeholders and it ishoped that the recently issued interim newsletter provided a helpful update onthe Group's activities including details of recent design awards. Board Appointments I am pleased to announce the appointment to the board of Geoffrey Wright on 1June 2007 as a non-executive Director. Geoff was previously the directorresponsible for construction and project management at Hammerson plc, one of theUK's leading development companies. Geoff will bring to the board a wealth ofexperience that will benefit the Group considerably. I am also pleased toannounce the appointment of Simon Harden as an Executive Director on 1 July2007. Simon, aged 51, is currently Managing Director of Waterman Internationaland has been responsible for the successful growth of the Group's overseasoperations. Simon's appointment recognises the increasing contribution thatthese important markets make towards the success of the Group. Employee Relations As a service business providing consultancy advice to its clients, Waterman'smost valuable asset is its staff. The level of repeat business is testament totheir professionalism and desire to deliver the highest quality of service. TheGroup rewards its staff through a range of salary and benefit packages includinga share incentive plan which is an annual appropriation of shares equivalent invalue to 5% of the pre-tax profits to employees who have been employedthroughout the financial year. In August 2007, a new share option scheme wasintroduced which provides senior management the opportunity to acquire ordinaryshares, subject to performance targets being achieved. In addition, a long termincentive plan has been ongoing since 2005 to provide a tax effective sharebenefit to management, which vests upon the achievement of challengingperformance targets. I would like to thank all our staff for their ongoing hard work and contributionover the last year during which a record volume of work has been successfullycompleted and also secured for the future. Future Prospects As a result of the Group's successful expansion and diversification strategyboth by engineering discipline and geographically, the volume of work isexpected to increase in the year ahead. The order book, which includes projectsin a wide range of sectors, stands at record levels and is enhanced by a numberof long term framework agreements with major clients. The demand for Waterman'sservices is increasing in the UK and overseas and the Group has invested inadditional office accommodation in many cities to meet client requirements.Despite the increasing uncertainty about the world economy, all sectors arecurrently performing well and your board views the coming year with confidence. Roger FidgenChairman Group Income Statementfor the year ended 30 June 2007 Before amortisation Amortisation Year Ended Year ended of acquired of acquired 30 June 2007 30 June 2006 intangibles intangibles (unaudited) (audited) Notes £'000 £'000 £'000 £'000---------------------------------------------------------------------------------Revenue - 103,903 - 103,903 83,680continuingoperations---------------------------------------------------------------------------------Earnings before 7,275 - 7,275 5,897interest, tax,depreciation andamortisation (EBITDA) Depreciation (1,301) - (1,301) (1,061)of PP&E Amortisation (222) (135) (357) (249)of intangibleassets---------------------------------------------------------------------------------Operating 5,752 (135) 5,617 4,587profit Interest (723) - (723) (518)payable Interest 200 - 200 145receivable---------------------------------------------------------------------------------Profit before 5,229 (135) 5,094 4,214taxation Taxation 3 (1,377) 40 (1,337) (1,421)---------------------------------------------------------------------------------Profit for the 3,852 (95) 3,757 2,793financial yearfromcontinuingoperations---------------------------------------------------------------------------------Profit 3,442 (95) 3,347 2,749attributableto equityshareholders Profit 410 - 410 44attributableto minorityinterest--------------------------------------------------------------------------------- 3,852 (95) 3,757 2,793--------------------------------------------------------------------------------- Basic earnings 4 12.0p (0.3p) 11.7p 9.7pper share Diluted 4 11.7p (0.3p) 11.4p 9.5pearnings pershare Dividend paid 5 5.6p 5.3pper share inthe year Dividend 5 3.6p 3.4pproposed pershare Group Balance Sheetas at 30 June 2007 As at As at 30 June 2007 30 June 2006 (unaudited) (audited) Notes £'000 £'000Non-current assets Property plant and equipment 13,938 13,536Goodwill 2 15,439 11,128Intangible assets 2 2,544 335Loans and receivables 10 10 Deferred tax asset 389 119--------------------------------------------------------------------------------- 32,320 25,128---------------------------------------------------------------------------------Current assets Trade and other receivables 50,887 35,611Cash and cash equivalents 6,221 3,332--------------------------------------------------------------------------------- 57,108 38,943---------------------------------------------------------------------------------Total assets 89,428 64,071--------------------------------------------------------------------------------- Current liabilities Trade and other payables 35,120 24,264Financial liabilities - borrowings 3,878 1,251Current tax liability 515 583--------------------------------------------------------------------------------- 39,513 26,098--------------------------------------------------------------------------------- Non-current liabilities Financial liabilities - borrowings 12,893 4,927Provisions 2,915 2,023Deferred tax liability 1,759 1,161--------------------------------------------------------------------------------- 17,567 8,111---------------------------------------------------------------------------------Total liabilities 57,080 34,209---------------------------------------------------------------------------------Net assets 32,348 29,862--------------------------------------------------------------------------------- Equity Share capital 2,879 2,856Share premium reserve 11,764 11,685Merger reserve 2,170 2,146Revaluation reserve 1,491 1,450Profit and loss reserve 13,180 11,361---------------------------------------------------------------------------------Total shareholders' equity 31,484 29,498 Minority Interest 864 364---------------------------------------------------------------------------------Total equity 32,348 29,862--------------------------------------------------------------------------------- Group Cash Flow Statementfor the year ended 30 June 2007 Year ended Year ended 30 June 2007 30 June 2006 (unaudited) (audited) £'000 £'000Cash flows from operating activities Cash generated from operations (see below) 7,211 5,899Interest paid (694) (477)Interest received 200 145Tax paid (1,602) (1,581)---------------------------------------------------------------------------------Net cash from operating activities 5,115 3,986--------------------------------------------------------------------------------- Cash flows from investing activities Acquisition of subsidiary undertakings, net of (5,208) (582) cash acquired Part disposal of subsidiary undertaking 13 -Deferred consideration paid (50) (1,272)Purchase of intangible fixed assets (349) (150)Purchase of property, plant and equipment (PPE) (1,243) (901)Proceeds from sale of PPE and intangible assets 23 32---------------------------------------------------------------------------------Net cash used in investing activities (6,814) (2,873)--------------------------------------------------------------------------------- Cash flows from financing activities Share issues 101 298 Net proceeds from issue of new bank loans 7,304 -Repayments of borrowing (708) (445)Repayments on finance leases (48) (62)Equity dividends paid (1,705) (1,499)Purchase of shares by Waterman Trustees Limited (263) (165)---------------------------------------------------------------------------------Net cash used in financing activities 4,681 (1,873)--------------------------------------------------------------------------------- Net increase / (decrease) in cash and cash 2,982 (760)equivalents 30 21Effect of exchange rate changes---------------------------------------------------------------------------------Net increase / (decrease) in cash and cash 3,012 (739)equivalents--------------------------------------------------------------------------------- Reconciliation of profit for the financial year tocash generated from operations Profit for the financial year 3,757 2,793Taxation 1,337 1,421Interest payable 723 518Interest receivable (200) (145)Amortisation of intangible assets 357 249Depreciation 1,301 1,061(Profit) / loss on disposal of PP&E and intangible (18) 1assetsShares granted under the share incentive plan 198 144Non cash charge 71 35Changes in working capitalIncrease in trade and other receivables (9,206) (1,683)Increase in trade and other payables 8,034 785Increase in provisions 857 720---------------------------------------------------------------------------------Cash generated from operations (see above) 7,211 5,899--------------------------------------------------------------------------------- Group statement of changes in shareholders' equity (unaudited)for the year ended 30 June 2007 Profit Total Share Share Merger Revaluation and Loss shareholders' Minority Total capital premium reserve reserve reserve equity interest equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 July 2005 2,791 11,452 2,146 1,450 9,875 27,714 704 28,418 Currency translation - - - - 21 21 (18) 3adjustmentsDeferred tax charge for - - - - 201 201 - 201the yearShare based payments - - - - 35 35 - 35charge for the yearAdjustment in respect of - - - - (21) (21) - (21)Share Incentive PlanAcquisition of 21% of - - - - - - (366) (366)minority interest insubsidiary undertaking------------------------------------------------------------------------------------------------------- Net income / (expense) - - - - 236 236 (384) (148)recognised directly inequity New ordinary shares issued 65 233 - - - 298 - 298 Profit for the financial year - - - - 2,749 2,749 44 2,793 Dividend - - - - (1,499) (1,499) - (1,499)------------------------------------------------------------------------------------------------------- Balance at 30 June 2006 2,856 11,685 2,146 1,450 11,361 29,498 364 29,862 Currency translation - - - - (13) (13) 34 21adjustmentsDeferred tax charge for - - - 41 91 132 - 132the yearShare based payments - - - - 71 71 - 71charge for the yearAdjustment in respect of - - - - (73) (73) - (73)Share Incentive PlanAcquisition of 41% - - - - - - 138 138effective interest insubsidiary undertakingPart disposal of 1% of - - - - - - 19 19share capital insubsidiary undertaking------------------------------------------------------------------------------------------------------- - - - 41 76 117 191 308Net income / (expense)recognised directly inequity New ordinary shares issued 23 79 24 - - 126 - 126 Profit for the financial year - - - - 3,347 3,347 410 3,757 Dividend - - - - (1,604) (1,604) (101) (1,705) ------------------------------------------------------------------------------------------------------- Balance at 30 June 2007 2,879 11,764 2,170 1,491 13,180 31,484 864 32,348------------------------------------------------------------------------------------------------------- Notes to the cash flow statement a) Analysis of net debt (unaudited) At 1 Other At 30 July non-cash Exchange June 2006 Cashflow changes movements 2007 £'000 £'000 £'000 £'000 £'000 Cash balances 3,332 2,859 - 30 6,221Bank overdrafts (547) 123 - - (424)-----------------------------------------------------------------------------Cash and cash 2,785 2,982 - 30 5,797equivalents CurrentBank loans (591) 708 (1,496) (64) (1,443)Finance leases (38) 48 (22) - (12) Deferred consideration (75) 75 (1,999) - (1,999) Non-currentBank loans (4,914) - (5,779) - (10,693)Finance leases (13) - 12 - (1) Deferred consideration - - (2,199) - (2,199)----------------------------------------------------------------------------- (5,631) 831 (11,483) (64) (16,347)-----------------------------------------------------------------------------Total (2,846) 3,813 (11,483) (34) (10,550)----------------------------------------------------------------------------- b) Reconciliation of net cashflow to net debt (unaudited) Year ended Year ended 30 June 2007 30 June 2006 £'000 £'000 Increase / (decrease) in cash balances 2,859 (664)in the yearDecrease)/(increase) in bank overdrafts 123 (96)in the year--------------------------------------------------------------------------Increase / (decrease) in cash in the 2,982 (760)year Net (increase) / reduction in (3,377) 1,704borrowingsNew bank loans (7,275) ---------------------------------------------------------------------------(Increase) / decrease in net debt (7,670) 944resulting from cash flows Exchange rate adjustments (34) 11--------------------------------------------------------------------------(Increase) / decrease in net debt in (7,704) 955the year Net debt at 1 July 2006 (2,846) (3,801)--------------------------------------------------------------------------Net debt at 30 June 2007 (10,550) (2,846)-------------------------------------------------------------------------- Notes 1. The Preliminary Announcement for the twelve months ended 30 June 2007 whichdoes not constitute the Group's statutory accounts as defined in Section 240 ofthe Companies Act 2005 was approved by the directors on 2 October 2007. The Preliminary Announcement is unaudited and the auditors' report on theGroup's financial statements has not yet been signed. The disclosures made meetthe requirements of the Listing Rules. The Report of the Auditors on the financial statements for the year ended 30June 2006 which were prepared in accordance with IFRS was unqualified and didnot contain a statement under section 237 (2) or (3) of the Companies Act1985.The financial statements for the financial year ended 30 June 2006 havebeen delivered to Companies House. 2. On 1 November 2006, Waterman International (Asia) Pty acquired 51% of theissued share capital of AHW Consulting Engineers (Victoria) Pty, a consultancybased in Melbourne, Australia for a maximum consideration of A$5,625,000(£2,300,000) before discounting. Net assets acquired of £764,000 includedintangible assets of £569,000, trade and other receivables of £842,000, cash of£565,000 and current liabilities of £1,297,000. The company was subsequentlyrenamed Waterman AHW (Victoria) Pty. On 20 April 2007, the Group acquired 100% of the issued share capital of BorehamConsulting Engineers Limited for a maximum consideration of £9,640,000 beforediscounting. The initial consideration of £4,940,000 was settled in cash and thedeferred consideration of up to £4,700,000 becomes payable on satisfying certainperformance targets and conditions. The provisional fair value of net assetsacquired of £7,195,000 includes intangible assets of £1,642,000, trade and otherreceivables of £5,205,000, cash and cash equivalents of £1,417,000 and currentliabilities of £1,397,000. 3. The tax charge for the year of £1,337,000 represents an effective rate of26.2% on profit before taxation. Full provision is made for taxation in Irelandwhere the corporate tax rate is 12.5% and in Dubai where the corporate tax rateis zero. A tax credit of £225,000 arose in respect of the prior year. 4. Basic earnings per share has been calculated on the profit attributable toequity shareholders and is based on a weighted average of 28,685,569 ordinaryshares (30 June 2006: 28,243,803). Diluted earnings per share has been calculated on the profit attributable toequity shareholders and is based on a weighted average of 29,302,516 ordinaryshares (30 June 2006: 29,012,872). 5. An interim dividend of 2.2p (2006: 2.0p) was paid on 19 April 2007. A finaldividend payable of 3.6p per share (2006: 3.4p) will be recommended by directorsfor approval at the Annual General Meeting. 6. The maintenance of the website is the responsibility of the directors; thework carried out by the auditors does not involve consideration of these mattersand accordingly, the auditors accept no responsibility for any changes that mayhave occurred to the Preliminary Announcement since it was initially presentedon the website. 7. Legislation in the United Kingdom governing the preparation and disseminationof financial information may differ from legislation in other jurisdictions 8. The Annual Report and Accounts for Waterman Group plc for the year ended 30June 2007 are to be posted to shareholders on 30 October 2007 and will beavailable to members of the public from that date from the Group's registeredoffice at Pickfords Wharf, Clink Street, London SE1 9DG. 9. The Annual General Meeting will be held on Friday 7 December 2007 at 12.00noon at The Apothecaries Hall, Blackfriars Lane, London EC4. The final dividendif approved will be paid on 18 December 2007 to shareholders on the register on16 November 2007. This information is provided by RNS The company news service from the London Stock Exchange