WTM.L Regulatory News (WTM)

WATERMAN ANTICIPATES STRONG GROWTH

AS DIVIDEND INCREASES BY 67%

Waterman Group plc, the international engineering and environmental consultancy, today announces its preliminary results for the year ended 30 June 2013.

· Order book increased by 5% to £105m driven by improving confidence in the UK property sector which remains the Group's largest market.

· Net cash increased by 22% to £1.1m whilst tangible net asset value per share has been maintained at 52p.

· Decisive action taken to restructure overseas activities leading to the Group's withdrawal from China during the year and the United Arab Emirates after the year end.

· Total dividends for the year increased by 67% with a target to reduce dividend cover from the current level of 2.8 times towards 2.0 times over the economic cycle.

· Reflecting the improving market conditions and the ongoing benefits of the strategic restructuring the Board has set the realistic target of tripling adjusted profit before tax over the next three years.

*Adjusted for amortisation of acquired intangible assets and exceptional items

Commenting on the results, Nick Taylor, Chief Executive said:-

" Waterman is in good shape. The results for the period reflect a historic backdrop of challenging trading conditions but, looking forward, our markets are much more positive. We have also re-positioned the business successfully and the result is a solid platform from which we are confident that over the next three years we will deliver strong growth."

" We are particularly enthusiastic about the prospects for our core market in the UK, which generates over 75% of Waterman's revenue. Our clients, many of whom are the major property developers, are much more confident and are starting a wide range of schemes. At the same time, we have reinforced our footprint and I am delighted that we are increasing our market share. As a result, our order book is strong with some first class projects, including the 1,000,000 (gross) sq ft new UK headquarters for Google UK Ltd at King's Cross."

-ends-

Date: 7 October 2013

For further information please contact:

Waterman Group plc Broker 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

We are very pleased with the encouraging progress that Waterman Group ("Waterman" or the "Group") is making. Despite the backdrop of challenging markets which is reflected in the results for the period, we have implemented a strategy to reposition the Group. The result is a solid platform from which we are planning to drive significant growth. 

Market conditions have improved in our core markets. This bodes well and we are much more confident about the future. We are now in the first year of a three year plan to drive a sustainable improvement in our financial performance. We anticipate that over this three year period we will build upon the current positive momentum, which we plan will result in a significant improvement in the Group's profitability. Our target is to triple the Group's adjusted profit before tax over the next three years. The executive team has developed a long term business plan to support this projected growth, which we anticipate will build value for our shareholders.

To reflect our confidence in the outlook for the Group's future performance the Board has recommended to shareholders a final dividend of 0.3p (2012: 0.2p) making a total dividend for the year of 0.5p. This is an increase of 67% on last year.

Improving UK Market

Our main business is focused on the UK market where over three quarters of the Group's revenue is generated and where we are pleased to report that we are seeing real signs of growth. This is due to a combination of the restructuring that we have already carried out and growth in demand for the Group's services as the UK economy improves. Our clients in the property sector are much more positive and are committing to starting large scale development schemes. We are benefiting from our close relationships with these long term customers and this is driving the growth of our order book. Encouragingly, we are also increasing our market share as larger competitors are more heavily focused on other sectors. 

The Group is very well placed in the UK market. We enjoy an excellent reputation and we are very confident that our position in the market will continue to strengthen, driving revenue and profit growth. We are in the first year of reporting an improved positive performance, but looking forward, we expect this business to be the main driver of our growth.

Strategic Initiatives

We have benefited from initiatives we have taken in recent years which have resulted in reductions in operating costs. The Board has continued to reduce the Group's exposure to markets which no longer provide us with prospects of adequate returns in the medium term. 

During the last financial year, we have withdrawn from China and have restructured our London international operations and integrated them into our structural, environmental, building services and civil and transportation centres of excellence. By drawing upon existing client and consultant relationships we anticipate generating overseas project opportunities within a more cost effective structure.

On 29 July 2013, as part of an ongoing evaluation of the prospects in all our businesses, the Board decided to withdraw from the United Arab Emirates. In the financial year to 30 June 2014 we currently anticipate that we will incur exceptional costs of around £1.9m with a cash outflow of around £0.8m after anticipated receipts associated with the orderly wind down of operations and financial settlements in respect to debtors and work in progress.

Order Book Growth

Reflecting our improving markets and our strengthening market share, our order book has grown by 5% to £105m. Much of this is as a direct result of our leading position in the UK property market. Our commitment to maintaining our position as a niche consultant in this sector is setting us apart from some of our larger competitors. We continue to work with the top developers, who are committing to major new development projects.

During the period, we have secured several significant commissions including:-

· The structural design of the 1,000,000 (gross) sq ft new UK headquarters for Google UK Ltd at King's Cross, London. In July 2013 Waterman's design team was relocated to site for the construction phase.

· In a strategic partnership, Atkins and Waterman have been appointed as the sole Tier 1 supplier to the West Midlands Highways Alliance framework. This framework contract will deliver a broad range of municipal highways and engineering consultancy services across the region for four years from June 2013.

· In Australia, Waterman has been appointed as technical advisers to the Victoria State Government for all engineering services on the new AUD400m, 500 bed Ravenhall Prison in Melbourne.

Full Year Results

In the year to 30 June 2013, Waterman Group achieved revenue of £66.8m (2012: £68.8m). The adjusted pre tax profit before exceptional items was £1.1m (2012: £1.1m). The adjusted pre tax profit excludes £0.3m (2012: £0.5m) for amortisation of acquired intangible assets and exceptional items of £0.4m (2012: £0.1m).

The board believes that the Group's adjusted pre tax profit before exceptional items should be reported showing the amount due to non controlling interests in the Group's Australian businesses and that available to Waterman shareholders.

As shown below, the adjusted pre tax profit available to Waterman shareholders rose by £103,000 (26%) from £403,000 to £506,000. Whilst the effect of the slow down in the Australian economy reduced the Australian business contribution by £548,000, there was a significant improvement of £651,000 from the Group's wholly owned businesses.

The basic earnings per share was a loss of 0.4p (2012: 0.3p loss). Adjusted earnings per share before amortisation of acquired intangible assets and exceptional items was a profit of 1.4p (2012: loss of 1.0p).

As at 30 June 2013, total net assets per share were 107p (2012: 109p), tangible net assets per share were 52p (2012: 52p) and net funds were £1.1m (2012: £0.9m).

Dividend & Dividend Policy

Reflecting our confidence in the future performance of the Group, we are increasing the dividend that we are paying to shareholders. 

The Board is proposing to pay a final dividend of 0.3p per share (2012: 0.2p). Subject to approval by shareholders at the Annual General Meeting, the final dividend will be payable on 10 January 2014 to shareholders on the register on 13 December 2013. The final dividend together with the interim dividend of 0.2p paid on 19 April 2013 makes a total dividend for the year of 0.5p (2012: 0.3p), an increase of 67%.

The full year dividend is covered 2.8 times by adjusted earnings per share.

Looking forward, the Board's policy is to pursue a progressive dividend policy, with dividend cover broadly reflecting the growth in underlying earnings over time and the Group's outlook and prospects. The Board also aims to move towards an adjusted earnings per share to dividend cover of 2 times over the economic cycle, subject to sufficient cash being generated by the Group and its investment and working capital needs. Achieving the Board's target to triple adjusted PBT over the next three years would accordingly translate into substantial growth in dividends.

People

To underline our improving market position and the increasing demand for our services for the first time in four years we have embarked on a recruitment drive. We are expanding and enhancing our engineering teams to service the growth in opportunities and projects, particularly in the property, transport, waste and energy sectors. 

I am pleased that the reputation of Waterman and the culture within the Group enables us to attract some outstanding candidates from graduate to director level. In response to an increase in our future workload our employee numbers have grown by 3% to 990 at 30 June 2013. 

Waterman retains its strong brand and our loyal and experienced employees are our key asset. These employees have long term established relationships with clients which continue to generate opportunities and commissions in our core property, infrastructure and public sector markets.

The operational and management boards will be further rationalised and strengthened as we move forward to provide opportunities for the next generation of directors to contribute towards and share in the success of Waterman.

Board

Ric Piper joined the Board on 15 January 2013 as a Non-Executive director. John Archibald stepped down as Senior Independent Director on 28 February 2013 following which Ric has been appointed as Senior Independent Director and Chairman of the Audit and Risk Committee.

I thank John for his valuable contribution to Waterman over the last ten years.

Strategy

The Board's vision is for Waterman to be "Consultant of Choice" for our employees, clients and shareholders.

Our strategy is to focus on our core markets to gain a greater share of the available opportunities through the recognition of our design excellence and the calibre and relationships of our engineers and consultants. The restructuring completed to date will enhance our ability to service local markets and to integrate our teams more effectively to take advantage of available resources and increase utilisation. 

Waterman's two main markets are the UK and Australia, which in the future will generate almost 94% of the Group's revenue. Whilst we are reliant on the strength of these economies to achieve our future objectives, we have mature, long established operations in these countries.

Outlook

The Board is increasingly confident that the steps we have taken to reposition the Group are now bearing fruit. Waterman is experiencing growth in several markets in the UK. In particular, our London based property clients are becoming increasingly active. This is providing opportunities and revenue, not only on commercial and residential developments in London, but also on retail developments throughout the UK.

The Group's secondment business, Waterman Aspen, which outsources engineers to County, Borough and City Councils on long term contracts, has in the first two months of the current financial year increased the number of staff on secondment by 16% to 248. Further secondment opportunities are anticipated in the short term. 

In Australia, the economy is less predictable and the Federal Government elections in September 2013 have impacted on the timing of decisions for projects in the healthcare, judicial and education sectors which provide a significant proportion of our future workload in this region. Our offices in Australia in spite of the delays are continuing to make a positive contribution to the Group.

We anticipate that we will also be boosted by the actions we have taken during the last financial year to restructure our international operations in China and the UK. This is anticipated to increase the Group's annual profitability in the current and future financial years by £0.2m. Furthermore, the winding down of our operations in the United Arab Emirates is expected to further improve annual profitability by £0.3m from the beginning of the 2014/15 financial year.

Whilst it is still early in the financial year, the Board is looking forward with confidence. Waterman has now entered a new period of growth as a stronger and more focused business, whilst retaining the senior management who have the strong client relationships established over many decades.

Finally, on behalf of the Board, I would like to express our appreciation to all our shareholders, clients and staff who have supported Waterman over the years through our periods of restructuring and consolidation as we responded to the changing market conditions. I am grateful for the patience shown during what has been a difficult period. We are confident that over the next three years, the steps that we have taken to re-position the business will deliver an improved performance. This will enable the Board to deliver value for our shareholders and to increase the dividend consistently. The future for Waterman is much more positive than it has been for some years and I look forward to keeping shareholders informed of our progress.

Roger Fidgen

Chairman

7 October 2013 

Structures

Waterman's structural business is able to report significant signs of improvement across the property sector. Structural teams are working on a variety of opportunities throughout the UK, including a number of projects that have moved forward as the market has become more buoyant. 

New commissions have increased the company's short to medium term order book. The recovery in London is more established and it is anticipated that this will continue and extend over time to the regions.

Financial Performance

* Operating profit is before exceptional items and acquired intangibles.

Commercial

London's commercial office sector continues to generate significant workload with both long term projects and new commissions. Waterman has commenced design work on the 90,000m2 new UK headquarters for Google UK Ltd at Kings Cross, London.

Land Securities has instructed the commencement of 1 and 2 New Ludgate, which will provide 40,000m2 of Grade A commercial space and foundation work has started on site. A second commission from Land Securities has been gained to proceed with the procurement of the construction of 1 New Street Square, London, a striking building providing 16 storeys of office space. 

6 Bevis Marks, a 22,000m2 commercial building designed by Waterman for CORE is due to complete in November 2013 and recently won the Ground Engineering (GE) Sustainability Award for the innovative approach to the re-use of the existing foundations.

Planning consent was secured in January 2013 for 48 Leicester Square which will provide a mix of 17,500m2 of office and retail space. The project is for an overseas client with CORE as development manager. The design integrates the existing façade that was constructed over a lengthy period from 1926 to 1959, into a modern and inspirational architectural solution.

In Jersey, Waterman has been appointed to provide multi-disciplinary design services on the Jersey International Finance Centre located in The Esplanade Quarter. The project consists of six buildings and an underground car park, totalling 50,000m2 of Grade A office space and 520 car park spaces. Waterman has initially provided advice on the planning application for the development but has recently been instructed to progress the detailed design of one of the buildings.

Residential

The residential market has performed well and workload in multi storey, high quality apartment buildings is delivering a significant volume of long term work. Waterman is involved with projects in many London boroughs, but particularly along the South Bank from Vauxhall to London Bridge. Additionally, Waterman designed schemes in the West End, Chelsea and the City are being progressed with confidence by our clients.

Neo Bankside, adjacent to the Tate Modern Gallery is now nearing completion and new projects such as Clarges Estate in Mayfair have recently commenced. Earlier this year Barratt East London appointed Waterman to design seven buildings at its East London development, Barrier Park East. The two 14 storey buildings will provide 284 one, two and three bed apartments. 

Student accommodation projects are under development in various locations. The Mayflower Halls scheme at Southampton for Osbourne Developments is making good progress and will provide over 1,000 rooms and facilities for a modern student environment when completed in 2014. The structural work on the 350 room student accommodation for Greenwich University with McLaren Construction is nearing completion.

Urban Regeneration

As areas of towns and cities become outmoded and in need of redevelopment, opportunities for major urban regeneration arise, providing a mix of commercial, retail and residential space. Waterman is currently involved in projects which include in excess of 400,000m2 of potential future development in inner city areas with developers such as Hammerson, Land Securities, Intu, Westfield and Lend Lease. 

Waterman's on-going relationship with The Crown Estate has resulted in its continued involvement in the regeneration of the Regent Street and St James's area of London and retail led schemes in Oxford and Exeter which are being developed jointly by The Crown Estate and Land Securities.

Waterman has been appointed for the structural design of Block W4, Regent Street. The development comprises a six storey, steel framed building above a two level basement, providing retail accommodation at ground and basement and 12,000m2 of commercial space above ground floor. The project retains listed façades and one of the remaining listed Nash designed vaults in the basement, which was apparently used by the Royal Family as a wine cellar until 1950.

Block W5, a second building designed by Waterman in Regent Street providing 11,000m2 of commercial offices has recently commenced on site.

Waterman has been appointed for the redevelopment of two sites also owned by The Crown Estate between Haymarket and Lower Regent Street, known as St James's Market. This development consists of two substantial buildings providing in total 31,000m2 of commercial and retail lettable area and is anticipated to commence on site later this year.

Waterman has been providing early scheme advice and support to the successful planning application for Barts Square, a large mixed use redevelopment in West Smithfield. The proposed scheme includes 215 high quality apartments, 23,000m2 of office space across two buildings and 2,300m2 of complimentary retail, restaurant and leisure use. 

Energy / Industrial

Work on the major new electricity substation in Edinburgh at Dewar Place has made considerable progress on site and the new facility will shortly be providing a more secure power supply to a large area of Edinburgh. Further phases of work at the site are planned for the future.

Waterman is working closely with construction companies and process engineers on energy from waste PFI projects. The North Allerton and Hertfordshire schemes are making progress and design work is expected to commence this year.

The 31,000m2 extension to the Princes soft foods drinks factory in Bradford has commenced on site. A new manufacturing facility in Lincoln for specialist steel forging company, Bifrangi is nearing completion and this will include the largest press in the UK, weighing 1,700 tonnes.

Education

As part of the BAM delivery team, Waterman has completed the Science Academy in Bradford which is a free school. Additional projects with BAM are the Maltby Academy and Boulevard Academy in Hull which are both on site and due to be completed in 2013.

Waterman's strong relationship with contractors has resulted in commissions for additional primary schools in Sheffield and London. Work has begun on the Priority Schools Building Programme which includes two secondary schools in Stratford, East London and another in Greenwich.

Retail

Waterman's workload in the retail sector has gradually increased during the year and the company is currently providing early planning advice on over 500,000m2 of future development. 

Tender information is being prepared on the 100,000m2 Victoria Gate, Leeds development for Hammerson with the first phase of design for the new John Lewis store well underway. Friars Walk in Newport, South Wales will provide a new town centre development of 39,000m2 and the scheme has recently secured planning consent.

The major supermarket retailers have changed their strategy to focus more on smaller units. Waterman's work for Tesco on the Express roll out programme is continuing and the company is advising on a large number of these projects throughout the UK.

Building Services

Waterman's building services business has seen a significant growth in its core markets in the second half of the year with a resultant improvement in margins. It has gained a greater share of work from the London market, particularly in the commercial and residential sectors. Alongside this, there has been more activity in all the regions across a diverse range of market sectors.

Financial Performance

* Operating profit is before exceptional items and acquired intangibles.

Commercial

The demand for commercial office space in London has improved throughout the year. This has been reflected in the recent successful letting of Waterman designed projects, 1 St Paul Churchyard for AXA, completed in June 2013 and Finsbury Circus House completed for CORE / Union Investment in spring 2013.

Waterman has been appointed on several new build schemes, including 251-258 Tottenham Court Road, a commercial office and retail scheme for Exemplar which was submitted for planning this summer. The improvement in the market is further reflected in Land Securities' decision to progress with the 40,000m2 1 & 2 New Ludgate scheme, as well as the recent Stanhope / Mitsui purchase of the One Angel Court site to develop the scheme previously designed by architect Fletcher Priest and Waterman in 2011. 

Residential

Waterman has continued to secure future commissions on prestigious residential and mixed use developments. The residential market has remained robust in London and commissions have been received on several significant schemes including the mixed use Clarges Estate Development in Mayfair for British Land and Old Burlington Street for Native Land. Several projects have progressed to site including Buildings P1 and T1 for Argent at Kings Cross and the Bentley House student accommodation development for Quintain / Wellcome Trust.

Hotels and Leisure

The last six months have seen an improvement in the hotel and leisure market and this is expected to provide new opportunities in the coming year. The design of the 100 bedroom Bow Street Boutique Hotel which is being developed within the Grade 2 listed former Magistrates Court and Police Station for Rudolf Ploberger, has been completed and the project has now progressed to site.

Retail

The retail sector has been providing work for the company's regional offices. Design is being carried out for retail parks in Leeds, Bristol and Birmingham including a major redevelopment of Battery Retail Park in Selly Oak which is at planning stage for Hammerson. Waterman is providing engineering services design for the on-going upgrades to the Bentall Centre at Kingston for Aviva and The Meadows retail centre at Chelmsford for Legal and General.

Education

Despite the reduction in government spending, Waterman has maintained its workload in the education sector, with nine secondary school projects completed during the year. The Building Schools for the Future (BSF) programme is still providing work with the Moat Community College, Ellesmere School and English Martyrs' Catholic School successfully completed on behalf of the Dodd Group as part of the Leicester BSF programme. St Albans Academy in Birmingham which received a National RIBA regional award was also completed in the year. Waterman has been appointed by BAM for the services design of Stratford School Academy at the Grosvenor Road and Upton Lane sites. The higher education sector has also contributed to workload with projects including an energy centre and a student residence scheme.

Industrial and Commercial

Commissions have been received by the Bristol office for further phases of the Manufacturing Technology Centre (MTC) in Coventry. In June 2013 Waterman was appointed on the MTC consultancy framework and has recently started design work for the new Aerospace Confidential Facility. Following completion of the Precast Concrete Facility in Steetley for Explore Manufacturing, Waterman's original building services team has been reappointed for the proposed £20m extension to the facility. 

Critical Systems and Facilities Management

Waterman Critical Systems group has enjoyed growth particularly within the facilities management transition planning market. This has resulted in a number of new commissions from Jones Lang LaSalle to support its Integrated Facilities Management transitions for various clients both in the UK and internationally including Nippon Sheet Glass Company and HSBC.

During the year Waterman was shortlisted for the CIBSE Client Energy Management Award 2013, due to achieving a year on year 20% energy cost reduction for client Slaughter & May.

The data centre market has continued to grow with demand for both new and upgraded facilities increasing. The Critical Systems group is starting the next phase of works on the infrastructure upgrades for Telecity Group and Visa Europe, plus projects for Ark Data Centres on their Cody Park and Spring Park campuses. 

New commissions have been received from Talk Talk and the next phase of development at both of the Ark Data Centre campuses is now underway. In addition to providing design services and risk management, Waterman has now established itself as a market leader in the specialist field of certification and system verification, a service increasingly required by data centre operators.

Performing Arts

Waterman has a growing reputation in this important niche sector. The Everyman Theatre in Liverpool is close to completion and will include a new 400 seat theatre and a dedicated youth and community space. It will set a high benchmark for environmental sustainability with the inclusion of a natural ventilation system. Waterman has been appointed to the redevelopment on the site of the prestigious Shakespeare Theatre in Shoreditch which was discovered last year after an extensive archaeological dig. Under plans submitted to Hackney Council, the plot will be transformed into a 250 seat open-air amphitheatre, with an accompanying museum and exhibition space that will include the preserved and protected remains of the original theatre. 

Energy, Environment & Design

Waterman's environmental business has strengthened its position as one of the UK's leading environmental consultancies. This was achieved by the delivery of a 12% growth in work done and a significant increase in profitability.

Good progress has been made in the diversification of the business with investment in the waste permitting and planning team, growth from the aviation sector and development of Waterman's on-line products, EnviroRisk and Greenspace.

The company will look to maintain its long term relationships with clients by developing services and products which provide pragmatic, commercial advice and added value.

Financial Performance

* Operating profit is before exceptional items and acquired intangibles.

Due Diligence & Environmental Management

It has been an excellent period for Waterman's due diligence service. The team consolidated its reputation as a leading advisor in the aviation sector. Commissions in the year included providing advice to companies bidding for Belfast, Stansted and Stockholm Skavsta Airports; supporting the successful acquisition of Hochtief Airports by PSP Investments, which included Budapest, Dusseldorf, Hamburg, Tirana, Athens and Sydney; on-going transactional support on four Russian airports; and advising on the sale and acquisition of Newcastle Airport.

The team has strengthened its position with private equity and institutional investor clients, due to the expansion of its Responsible Investment service. EnviroRisk Online was successfully launched during the year allowing online ordering of a wider range of Environmental Screening Reports in support of commercial lending.

Waterman's Greenspace Environmental Management System tool, which provides corporate environmental, health, safety and carbon management services, has been further developed and retains its leading market position. New applications include the Superuser function which allows efficient and cost effective control of multisite portfolios, attracting clients such as Network Rail and Tata Steel. There has also been growth internationally and Greenspace has been used by multinational corporations in Sweden, Holland and Australia to manage direct operations and/or supply chains.

Pre-Planning Services, Sustainability & Environmental Impact Assessment (EIA)

Waterman has strengthened its position as a leading provider of pre-planning and EIA services for urban regeneration projects. EIAs have been undertaken for a number of major schemes which have recently received planning permission. Projects include Elizabeth House Waterloo for Elizabeth House Limited Partnership, Ram Brewery for Minerva, Smithfield Quarter for Henderson Global Investors (planning application and application for listed building consent currently 'called-in' by the Secretary of State), Portland House in Victoria for Land Securities, and the major regeneration of Elephant and Castle for Lend Lease.

Waterman has been retained by the Royal Mail Group as EIA consultant to support its proposals and planning applications in relation to the Mount Pleasant sorting office site into a mixed use development, providing 681 residential units, office and retail units and shared community space. Canary Wharf Group plc appointed Waterman as EIA consultant for two tall building developments; Heron Quays West and Newfoundland, adjacent to West India Docks. Planning applications were submitted to the London Borough of Tower Hamlets for these schemes in Spring 2013.

Outside London, Waterman has continued to increase its regional presence. EIAs have been carried out for Victoria Gate development in Leeds for Hammerson and for the expansion of WestQuay in Southampton. Waterman continues to support Wilson Bowden Developments' regeneration of Macclesfield town centre and has been retained by British Land and Centros for the development of a ten acre city centre site in Lancaster, known as Canal Corridor North.

In Scotland, Waterman has undertaken EIAs for two residential developments on the Edmonstone Estate in the greenbelt of south east Edinburgh. Additional new commissions include the provision of EIA services to Persimmon Homes and Gladedale for residential development within a new Community Growth Area to provide approximately 3,000 dwellings for the villages of Gartcosh and Glenboig in North Lanarkshire.

Waterman continues to provide sustainability services on high profile projects, including the new US Embassy in Vauxhall, Quadrant 2 in Regent Street for The Crown Estate and redevelopment of the Clarges Estate, a major new 19,350m2 residential led, mixed use scheme in Mayfair for British Land.

Waterman's landscape, archaeology and ecology teams have continued to deliver pre-planning services to clients in the residential, retail, education and transport sectors. The teams are currently working on a number of residential developments including Bodelwyddan Key Strategic Site in North Wales for Barwood Land and Estates, Tidbury Green in Solihull for Lioncourt Homes and Land at Clovelly Road, Bideford for Linden Homes.

Land Quality & Brownfield Regeneration

Waterman's land quality team was appointed by the Bristow Group to support its bid for the £1.6bn ten year contract to take over the UK's helicopter search and rescue (SAR) operations on behalf of the Maritime and Coastguard Agency. Following the award of the contract in early 2013, Waterman has been providing a range of pre-planning assessments to support Bristow's planning applications for new SAR facilities, together with geo-environmental site investigations for use in the design process.

Other key appointments have included work for the Royal Mail Group and LXB Retail Properties. Work has continued on the former 500 hectare US Air Force Base in Upper Heyford, Oxfordshire.

Other Markets

Waterman has continued to diversify the environmental business into non-property sectors. Recent commissions include the EIA for an Energy Recovery Centre in Hampshire, an EIA to accompany an application for the demolition of two gas holders in north London and the provision of various technical services relating to the decommissioning and demolition of a former paper mill in South Yorkshire. In Scotland, the team completed a number of assessments for small scale wind farms and hydro-electric proposals at sites in Perthshire, Lanarkshire and Ayrshire, motorway improvement works on the M90 in Fife, and continuing EIA and related work on several proposed energy from waste sites.

Waterman's waste planning team prepared environmental permit applications for waste transfer and treatment facilities in London, Kent and East Sussex and these included planning applications for the majority of sites. It also successfully provided an environmental permit application for the dismantling of aircraft at an airport in south east England. 

In addition to providing support on numerous planning appeals, Waterman was appointed to assist a local authority to manage landfill legacy issues. Legislation compliance training has been given to clients, particularly in respect of their obligations under the Duty of Care, the application and understanding of the European Waste Catalogue code list, Waste Acceptance Criteria and Waste Acceptance Protocol. 

Other public sector commissions have included technical studies to support a planning application for a new cemetery for Crawley Borough Council and a detailed constraints analysis for a proposed bypass through an environmentally sensitive area for Eastleigh Borough Council.

Civil and Transportation

Waterman's civil and transportation consultancy business has experienced a mixed performance resulting from legacy operational issues and a recovery plan is underway. 

Waterman Transport & Development and Waterman Boreham have been merged together and the restructure of the company and management has now been completed. Many offices have been affected by uneven workload and resources have been streamlined to increase utilisation.

Whilst London remains a buoyant market, 85% of our civil engineering resource is located in the UK regions to provide local services in transport, development planning, infrastructure design, power, energy and waste. The regions remain a tough market while investment activity by our clients is reduced.

Waterman Aspen, our civil engineering secondment business is growing again and has won several significant frameworks for the outsourcing of engineers into County, Borough and City Councils on long term contracts.

Financial Performance

* Operating (loss) is before exceptional items and acquired intangibles.

Development Planning and Infrastructure Design

Waterman's engineering planning teams have experienced consistent workload during the year, particularly as a result of the demand for flood risk and water management services. More than one hundred projects of this type have been completed. Allied to this there was an improvement in the number of infrastructure schemes that have progressed to detailed design.

The teams have worked on a number of urban regeneration schemes throughout the UK. Work has continued on the Eastgate development in Leeds and The Junction Development in Oldbury and work is set to continue on both of these projects into 2014. Engineering planning work was carried out for the Whitgift development in Croydon and a number of smaller schemes have been progressed as part of the continuing development of central Milton Keynes.

Design work has been completed for the Laurieston Transformation and Regeneration project in Glasgow, and continues on the Mill Street Development in Aberystwyth, which is due to be tendered in early 2014.

Revenue has been generated from the residential sector across all regions and Waterman has carried out work on over 150 residential schemes for clients including Taylor Wimpey, Barratt Homes, Berkeley, Miller Homes, Persimmon Homes and Robertson.

Work in the retail sector has continued in the year. On-going projects include work at West Quay in Southampton, Westgate in Oxford, Cyfarthfa Retail Park in Swansea and Albotsinch Retail Park in Paisley. The Elliots Field project in Rugby has been submitted for planning and is expected to commence on site in 2014. Work was completed on a number of projects for Tesco and in June 2013 Waterman was reappointed to the Tesco framework for transport planning and highway design.

In other sectors, the Midlands team has been working on the Motor Industry Research Association (MIRA) technology park near Tamworth, designing the infrastructure necessary to allow the first phase of this development to commence. Work continues on further phases of the Manufacturing Technology Centre (MTC) at Anstey Park, Coventry; a major industrial research facility allowing collaboration between some of the UK's global manufacturers and the Universities of Birmingham, Nottingham and Loughborough.

In Scotland, work has progressed on Hampden Stadium in Glasgow, which is to be converted to host the 2014 Commonwealth Games. Design work is complete and the team will assist in the delivery of the temporary facilities in time for the opening ceremony. Waterman has also been appointed to provide engineering services for a number of other venues for the Games.

Power Energy and Waste

Despite the current uncertainty regarding the future source of power generation in the UK, Waterman has continued to carry out work at a number of UK power stations. In particular, a major selective non catalytic reduction (SNCR) scheme has been completed at Fiddlers Ferry Power Station. Commissions for further upgrade projects are expected in the future.

Work has continued on a large number of schemes for the Transmission Distribution and Renewable energy divisions of Scottish and Southern Energy (SSE). Although this work will decrease as the grid reinforcement scheme in Scotland is completed, the company is well placed to win further work in this market sector in Scotland.

Waterman has been involved in the planning and design of wind turbine schemes throughout the UK and it is anticipated that this will provide continuing workload into 2014. In addition to this form of renewable energy, the company has recently been commissioned to plan and design a series of small scale hydroelectric schemes. 

Consultancy advice has been provided on a number of anaerobic digestion waste to energy schemes and this has been associated with proving the viability of the schemes to obtain funding. This work is now complete and funding has been agreed for at least two schemes, which will allow them to progress to the design stage in late autumn 2013.

The conventional power generation and distribution market, the renewable energy, and waste to energy markets are anticipated to provide an increasing level of work for Waterman in the short to medium term, given the project experience that the company can demonstrate to potential clients.

Transport

The volume of work from the rail sector has been maintained during the year. The £75m Royal Arsenal and Woolwich Crossrail Station structure was completed on budget and ahead of programme. Work has continued on the associated development and this should be completed by the end of 2013. The specialised service offered by the rail team in London to developers who wish to obtain asset protection approvals from Network Rail and London Underground continues to be in high demand. 

Waterman is currently working on five major projects in London and the sector is anticipated to provide continuous workload for the foreseeable future. The team also has experience of designing below ground structures and has recently been working on the enabling works at King's Cross for the major development by Argent Estates, which will be occupied by Google. 

The rail team has been designing station upgrades as part of the National Station Improvement Programme and has been working on Woking, Clapham, Cambridge, Dover Priory, St Pancras and Severn Sisters stations. Design studies are currently being progressed to return the redundant Eurostar platforms at Waterloo back into operation. In Manchester, Waterman has frameworks with both Merseytravel, which is the integrated transport authority for Merseyside, and Metrolink RATP, which operates the Manchester tram system. 

The Waterman AutoRail database continues to be widely used as the primary source of information for the UK rail network. Waterman has been reappointed by Network Rail to maintain the database and issue regular updates to subscribers, which include Network Rail, train operating companies, consultants and contractors.

In the highway sector, Waterman continues to be involved in a number of schemes throughout the UK. Ongoing work includes additional phases of the Bedford Southern Bypass for Bedford Borough Council, a financial and environmental appraisal for the proposed Botley Bypass in Hampshire and the design of the South Montrose link road in Scotland. 

Projects have been undertaken at both Gatwick and Heathrow Airports as part of the consultancy framework with British Airways. In addition, the team successfully completed a number of projects for London City Airport and further work in the aviation sector is being pursued.

Public Sector

Waterman has a number of active frameworks with councils in both England and Scotland and further frameworks are currently being tendered. Waterman's objective is to increase the proportion of work provided by public sector frameworks across all regional teams. 

In the health care sector, design work has been completed on Ballymena Health and Care Centre in Northern Ireland and the project is due to start on site early in 2014. Other projects include the Kilbryde Hospice in East Kilbride and a number of medical centres and GP surgeries.

A series of projects have been undertaken in the education sector across a number of schools and further education establishments. A major project has been the Port Glasgow Joint Campus, which has been under construction during the year and is due for completion by the end of 2013. The team has now been appointed for the design of a new special needs school in Linwood near Glasgow. Engineering advice has been provided to Manchester Metropolitan University, Glasgow University Library and Sussex Coast College. 

Secondment Services

Waterman Aspen provides secondment services primarily to the public sector and the recovery that started in January 2012 has increased during the second half of the financial year. The number of staff in secondments increased and by June 2013 it was over 200. A further 26 secondments were added in July and the demand is anticipated to remain high for the coming year.

Waterman is part of the East Midlands Highways Alliance Professional Services framework with URS and this has provided a significant level of work since it was won in 2011. In a strategic partnership, Atkins together with Waterman have been appointed as the sole Tier 1 supplier to the West Midlands Highways Alliance framework for a period of four years from June 2013. This has proved to be an immediate success providing a number of requirements for seconded staff. 

Outside of these two frameworks, demand for seconded staff from councils has increased throughout England, whilst in Scotland the level of secondments has been maintained. A significant number of staff have been seconded into the rail industry and further expansion into this market is expected.

Health and Safety

Waterman Health and Safety provides consultancy services to clients across all market sectors in which Waterman operates.

The recovery of the property markets, both in London and the rest of the UK, has seen an increase in demand for health and safety consultancy services. This, coupled with framework agreements with Bristol Schools, Plymouth University, Enfield Council and long term projects at Broadmoor Hospital and the Haggerton and Kingsland regeneration project in London, has resulted in a sustained increase in workload during the year.

In addition to property market work, the team has seen an increase in work from the power and energy sector. 

International

Waterman's international operations have continued to experience challenging conditions as projects stalled.

Action has been taken to reorganise and refocus the business to meet the demands of the available markets. During the year we withdrew from China and integrated our London operations into our UK structures and Building Services teams. 

Waterman's future overseas focus is now on our main operations in Australia, Ireland and Russia where the economies are improving and where we have an established operation.

Financial Performance

* Operating profit/(loss) is before exceptional items and acquired intangibles.

Australia

Market conditions in Australia have been affected by slowing economies in China and the demand for minerals. Strategic diversification into stronger sectors has resulted in the Australian businesses continuing to generate healthy profitability. Work has focused on local projects across the country from the public and private sectors.

Projects in the telecommunications, education and residential sectors have contributed to the revenue of the Sydney office. Investment in the telecommunications sector is mostly driven by Australia's National Broadband Network infrastructure rollout and this resulted in Waterman undertaking significant infrastructure fibre cable design projects during the year.

Australian universities have continued to invest in infrastructure buildings and in Sydney, Waterman has been involved in the design of student accommodation, faculty facilities and a nanoscience research centre. In the expanding residential sector, the company has been working on several major developments including The Quay project for Parkview consisting of two towers, seventeen storeys in height. Other residential commissions include developments at exclusive suburbs in Lane Cove, Freshwater and Mosman and a major defence housing project. During the year, Waterman continued as lead consultant on behalf of Transport for New South Wales for the decommissioning of Sydney's iconic Monorail which is being removed to make way for further development around the city.

Major projects secured by our Sydney office include:

· 20,000m2 fit out for international investment bank Goldman Sachs 

· Barangaroo Headland Park for Baulderstone

· Goodman Fielder food manufacturing facilities

· High density data centre for Telstra

· New support facilities for the electricity network operator Transgrid

Waterman's Melbourne office has continued to focus on diversifying its sector spread and has been actively marketing in the defence, justice and mixed use aged care sectors. Core business sectors such as residential, retail and education have remained slow, whilst others such as sport and recreation, court and prison works have increased in activity.

In Melbourne, work has continued on several projects including the Albury Wodonga Cancer Centre, Caulfield Hospital acute brain injury unit, Frankston Hospital emergency department, Kangaroo Flat indoor aquatic centre facility, La Trobe University rural health building and the Maroondan indoor aquatic centre.

Additional work has been secured throughout the year and the focus on marketing in some of the more specialist sectors has resulted in maintaining forward workload. Melbourne's extensive experience in the healthcare sector has resulted in tenders for work both nationally and internationally with several architectural partners. Targeted marketing into the expanding justice sector has generated several new commissions for court and prison complexes and it is anticipated that this will be a future area of growth for the business.

Recent projects secured by the Melbourne office include:

· 500 bed new Ravenhall Prison

· AUD260m Monash Children's Hospital

· AUD140m high rise residential development at St Kilda Road

· 20 storey hotel complex at Flinders Lane

· 120 bed aged care facility for BUPA

Commonwealth of Independent States (CIS)

Waterman's office in Moscow, Russia is the base of operations in the CIS, offering services throughout the region. Over the last twelve months trading conditions have continued to be difficult with competitive fee levels but with a reasonably steady workload and an increasing level of enquiries.

Phase two of the Khamovniki complex, a mixed use primarily residential development of 444,600m2 in Moscow has commenced and Waterman has completed the detailed design and has started working drawings for the substructure. There are a further three phases of the project to be developed in the future.

Other Waterman designed developments in Moscow which are currently progressing through the construction phases on site are Smolensky Basage, a 60,000m2 primarily commercial development and Smolensky Boulevard, a mixed use development.

During the year, several new commissions were won including a commercial development in St Petersburg, a large Jewish community project in Moscow and serviced apartments at Sadovnicheskaya. Waterman has continued to work as retained consultants for the Tsum retail centre in Moscow, completing the fit out of several retail units and has recently been appointed for the Hugo Boss store.

Europe

Waterman's European operations, which are focused on Ireland and Poland, have continued to experience the effects of the depressed conditions in the Euro zone and broader European market.

However, the second half of the financial year has seen positive signs that a tentative recovery is underway in both the Irish and Polish property markets and Waterman is well placed in both countries to take advantage of improved conditions.

In spite of the continuous decline in the construction sector in Ireland, Waterman has improved its market share and maintained its capacity. The Dublin team remains busy, with the civils group in particular benefiting from a number of planning commissions in the latter part of the year, as developers begin to reconsider development options after five years of inactivity. The entry of international property investors to the Irish market has given additional impetus to the nascent recovery.

Residential developers have been focused on Dublin and the east coast of Ireland. Waterman has submitted planning applications for a number of housing schemes and construction has commenced on two developments at Adamstown and Clongriffin. In the retail sector detailed designs have been completed for several supermarket developments including the Honeypark Neighbourhood shopping centre and a retail outlet in Terenure with works now progressing on site. The Aldi store at East Wall Road was completed and handed over in the year.

Whilst there has been little activity in the commercial sector in Dublin over the last five years, the demand for high quality office space is increasing. Waterman has been appointed by US Property Investment Fund, Kennedy Wilson, to provide multi disciplinary engineering services for a planned large commercial development at the prime Dublin city centre site at Sir John Rogerson's Quay. Kennedy Wilson has also retained Waterman to provide design services for the Clancy Quay mixed use development in Dublin.

The multi-user education campus in Monaghan and two other schools were completed on site during the year. Waterman is developing designs for five further educational facilities including the Kingswood Exemplar secondary school on behalf of the Irish Department of Education as a prototype for future school developments.

The property sector has improved gradually in Central Europe and opportunities have arisen in the refurbishment and upgrading of existing assets, due diligence work and early stage planning activities. In Poland, Waterman has continued to secure a steady stream of due diligence and BREEAM assessment work. Technical approvals were gained for the 100,000m2 retail development at Bialystock. Feasibility work was completed for the refurbishment of the 26,000m2 Pramerica office tower in Krakow, the tallest building in the city and Waterman is now progressing the detail design. The company has been retained as due diligence advisors for several retail, residential and commercial property transactions. Commissions have been completed for the Polish energy company PGE, together with transportation studies in support of a major extension to the Bremowo shopping centre in Warsaw.

The London based international team has completed a beachfront high-rise residential development in Accra, Ghana and the design of a major mixed development at Rostov in conjunction with Waterman's Moscow office. Variations in international workload during the year have led to the reorganisation of the London team and its amalgamation with the structural and building services teams responsible for UK work. This gives a more sustainable model for the future, with greater resources available and with the international expertise embedded in the teams. The new approach to service the global markets is showing some early signs of success with the recent appointment of Waterman to provide multi-discipline engineering planning and design services for the prestigious Trinity Place residential development in St Petersburg.

Middle East

The year has again been a difficult one for Waterman's Middle East operations with slow market conditions in the UAE and high competition for projects driving fee levels down.

The early part of the year was busy with commissions such as the 100,000m2 MICA retail mall on Kish Island and the Kazanah data centres in Dubai and Abu Dhabi. In addition to this work, Waterman was appointed for the design of a hotel and office complex in Lebanon by MAF Properties based in Dubai. In November, the company's involvement in the major Al Muneera project at Al Raha Beach was finally concluded at the end of the contractor's defects period. MEP design work on the sixty storey City of Lights Office development was completed and the site inspection stage will continue until December 2013. 

The second half of the year was quieter and ongoing projects included a new hotel for Meeras in Dubai, data centres in Mauritius and Oman, and the concept stage for the main hotel and residences at Khams Shamat in Sabourra. Site services on the refurbishment of the Deira City Centre Hotel in Dubai for MAF are continuing and the project is expected to complete in September 2013.

Waterman has recently completed its commission for the development of the ICT Strategy for the Heart of Doha project in Doha. The data centre operations team has continued to provide facilities management services on the three year term contract until December 2013 for the Injazat data centre in Abu Dhabi which was originally designed by Waterman.

On 29 July 2013, as part of an ongoing evaluation of the prospects in all our businesses, the Board decided to withdraw from the United Arab Emirates. In the financial year to 30 June 2014 we currently anticipate that we will incur exceptional costs of around £1.9m with a cash outflow of around £0.8m after anticipated receipts associated with the orderly wind down of operations and financial settlements in respect to debtors and work in progress.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

Notes to unaudited Consolidated Financial Statements

for the year ended 30 June 2013

1. General information

The Group is a multidisciplinary consultancy providing sustainable solutions to meet the planning, engineering design and project delivery needs of the property, infrastructure, environment and energy markets worldwide.

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 2013, which does not constitute the Group's statutory accounts as defined in section 435 of the Companies Act 2006, was approved by the Board on 2 October 2013. The Preliminary Announcement is unaudited and the Report of the Auditors 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 2012, 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 2012 have been delivered to Companies House.

2. Basis of preparation

The unaudited Consolidated Financial Statements for the year ended 30 June 2013 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 Board expects to be applicable as at 30 June 2013. IFRS is 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 the Board'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. All of the accounting policies adopted are consistent with those of the audited Financial Statements for the year ended 30 June 2012, as described in those Financial Statements. There have been no significant changes to the Group's accounting policies during the year.

Estimates, assumptions concerning the future, and judgments are made in the preparation of the Financial Statements. They affect the application of the Group's accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an ongoing basis and are based on experience and relevant factors including expectations of future events that are believed to be reasonable under the circumstances.

Critical Judgments: The Board considers that the estimates, judgments and assumptions which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:

· Revenue recognition and the assessment of the percentage of completion achieved. 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;

· The impairment of trade receivables and amounts recoverable on contracts;

· Provisions in respect of potential liability insurance claims;

· The impairment testing of goodwill; and

· Determining the recoverability of the deferred tax asset.

4. Segmental information

* The international multi-disciplinary business segment consists primarily of Building Services and Structures disciplines.

4. Segmental information (continued)

5. Exceptional items

The following is an analysis of the Group's Exceptional items, all of which have been included in the Consolidated Income Statement.

a) Other restructuring costs: Relates mainly to redundancy costs resulting from closure of the Chinese operation and restructuring within the UK. The 2012 costs mainly arose from restructuring of the Building Services and Civil and Transportation businesses.

b) Profit on sale and leaseback of Land and freehold property: In the year to 30 June 2012, the Group disposed of its head office building through a sale and leaseback agreement. The property was sold for £11,914,000 and realised a profit of £4,116,000 before tax and after transaction costs of £457,000.

c) Office closure costs: Primarily costs associated with the closure of the Chinese office.

d) Property provisions and accruals: Surplus provisions for office closure made in the year to 30 June 2012 have been written back to profit in the current year following favourable settlements for office dilapidation costs.

e) Work in progress and trade receivables provisions: Due to the closure of the Chinese operation and the restructuring in the UK, the Group has made provision against £66,000 (2012: £1,478,000) of work in progress and trade receivable balances.

f) Taxation: The exceptional taxation credit of £93,000 (2012: £623,000 credit) is due to the tax deductibility of the exceptional items.

6. Taxation

The taxation charge for the year ended 30 June 2013 of £84,000 (2012: £40,000 credit) represents an effective tax rate of 23.7%. This rate is in line with the UK corporation tax rate of 23.75% for the period. The benefits of research and development (R&D) tax credits offset the impact of the charges due to the higher Australian tax rate and losses not recognised. The taxation charge includes a net credit from one off items of £57,000. If the credit were to be deducted, from the charge, the taxation charge would be £141,000 representing an effective tax rate of 39.9%.

7. (Loss) /earnings per share

The Basic loss per share has been calculated on the Loss attributable to the owners of the parent and based on the weighted average of 30,567,407 shares (30 June 2012: 30,552,824) in issue and ranking for dividend during the year.

The Diluted earnings per share takes account of unexercised share options potentially convertible into new ordinary shares. The calculation is based on the loss attributable to the owners of the parent and a weighted average of 30,567,407 shares (30 June 2012: 30,552,824) during the year.

Adjusted earnings per share before amortisation of acquired intangible assets and exceptional items is 1.4p (2012: loss of 1.0p) as set out below.

8. Dividends

An interim dividend of 0.2p per share was paid on 19 April 2013. Reflecting its confidence in the outlook for the Group, the Board recommends to shareholders a final dividend of 0.3p per share (June 2012: 0.2p per share).

If approved by shareholders at the Annual General Meeting to be held on 6 December 2013, the shares will become ex-dividend on 11 December 2013 and the dividend will be paid on 10 January 2014 to those shareholders on the register at the close of business on 13 December 2013.

When added to the interim dividend of 0.2 pence per share (2012: 0.1p), this makes a total dividend for the year of 0.5 pence per share, giving dividend cover on adjusted earnings per share of 2.8 times.

9. Property, plant and equipment

Disposals during the prior year include £7.3m relating to the sale of Pickfords Wharf (see Note 5b).

10. Trade and other receivables

Trade receivables net of provisions at 30 June 2013 were £18.4m (2012: £18.2m) of which £9.5m

(30 June 2012: £8.9m) 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 2013 were £11.0m (2012: £10.2m).

The Board considers that the carrying value of trade and other receivables approximate to fair value.

11. Cash and cash equivalents

Cash and cash equivalents include the following for the purposes of the consolidated cash flow statement:

12. Trade and other payables

Trade and other payables at 30 June 2013 were £19.3m (2012: £19.3m) of which £2.6m (2012: £3.0m) relate to trade payables.

Included in Trade and other payables were Fees invoiced in advance on long term contracts at 30 June 2013 of £8.7m (2012: £7.7m).

The Board considers that the carrying amounts of trade and other payables approximate to their fair value.

13. Financial liabilities-borrowings

The Group had a term loan totalling £1.7m (2012: £2.1m) disclosed above within Bank loans which is repayable by quarterly instalments until 2017. The term loan is subject to three financial covenants which are tested half yearly.

14. Provisions

Liability insurance claim provisions reflect management's estimate of the likely costs to be incurred by the Group arising from professional liability claims.

Property provisions relate to rent, rates, service charge and other associated costs relating to properties that have been vacated before the end of the lease term or before a break clause can be exercised.

These provisions will be carried forward until the matters to which they relate are resolved and the provisions are utilised or released as appropriate. No provision has been released or utilised for any purpose other than that for which it was established.

15. Share capital

The share capital of the Company comprises ordinary shares of 10p each. No shares were issued during the year.

16. Notes to the Consolidated Cash Flow Statement

At 30 June 2013, £1.8m (2012: £2.3m) of the cash and cash equivalents was held in subsidiaries not wholly owned by the Group, of which £0.8m (2012: £0.9m) was attributable to the non-controlling interests.

17. 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 unaudited Consolidated Financial Statements and Notes.

The Directors have prepared a cash flow forecast and a forecast for covenant compliance to 30 June 2015. The financial covenants allow for a sensible tolerance in trading performance in relation to the forecasts. The Directors are confident that the underlying forecasts are reasonable. In the current economic climate the Group is reliant on the ability of customers to pay debts and on the timing of projects coming on line. In adverse circumstances the Board has a number of mitigating actions it could take to seek to ensure covenant compliance.

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 13 'Financial liabilities-borrowings'. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

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 consider it is appropriate to continue to adopt the going concern basis in the preparing the unaudited Consolidated Financial Statements. As with all business forecasts, the Directors cannot guarantee that the going concern basis will remain appropriate given the inherent uncertainty about future events.

18. Post Balance Sheet Event

In July 2013, the Group decided to withdraw the design group from the UAE. In the financial year to 30 June 2014, the Group anticipates that it will incur an exceptional provision of around £1.9m with a cash outflow of around £0.8m after anticipated costs associated with the orderly wind down of operations and financial settlements in respect to debtors and work in progress.

19. Further information

Electronic copies of the Annual Report and Financial Statement will be made available on the Group's website www.watermangroup.com from 8 November 2013. Additional copies will be available on request from the Company's registered office at Pickfords Wharf, Clink Street, London SE1 9DG.

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.