WTM.L Regulatory News (WTM)

10 Mar 2006 07:01

Waterman Group PLC10 March 2006 WATERMAN REPORTS ROBUST MARKET AS ORDER BOOK GROWS Waterman Group plc, one of the UK's leading multidisciplinary engineering andenvironmental consultancies, today announces its interim results for the sixmonths to 31 December 2005. • Revenue increased to £40.3m (2004: £35.7m)• Profit before tax increased to £2.01m (2004: £1.84m)• Basic earnings per share of 4.6p (2004: 5.0p)• Interim dividend up to 2.0p (2004: 1.9p)• Substantial long term order book• Major new international projects awarded • Major Urban Regeneration projects continue at: - Whitecity, West London- Paradise Street, Liverpool- Merchants Quarter, Bristol- The Shires, Leicester- Eastside, Nottingham • Major new appointments including: - Trocadero, London- Former Stock Exchange Tower, London- 1 Wood Street, City of London- Lots Road residential development, London •Key international projects: - Point Depot concert venue, Dublin- International Finance Centre, Dubai- Master plan - Tianjin, China- Office Tower, Moscow Commenting on the results, Bob Campbell, Managing Director said, " Waterman is performing well. Our markets are robust and we are working on someof the UK's largest Urban Regeneration projects. Our long-term order book isvery encouraging and extends out to 2013. Our international businesses areperforming well and there remain many opportunities for further growth. " I look forward to reporting further progress later in the year." -ends- Date: 10 March 2006 For further information contact: Waterman Group plc cityPROFILEBob Campbell, Managing Director Simon CourtenayGraham Hiscocks, Finance Director 020-7448-3244020-7928-7888web: www.waterman-group.co.uk CHAIRMAN'S INTERIM STATEMENT In the six months to 31 December 2005, I am pleased to report that, under thenew IFRS reporting guidelines, Waterman Group achieved an increased pre taxprofit of £2.01m (2004 : £1.84m) on revenue of £40.3m (2004 : £35.7m). Basicearnings per share were 4.6p (2004 : 5.0p) and the Board has decided to increasethe interim dividend to 2.0p per share payable on 19 April 2006 to shareholderson the register on 24 March 2006. Group Activities - UK The Group continues to provide consultancy services on a number of the UK'slargest urban regeneration projects, including WhitecityTM , West London;Paradise Street, Liverpool; Merchants Quarter, Bristol; The Shires, Leicesterand Eastside, Nottingham. A number of new commissions have also been secured inthis sector which has strengthened the Group's long term order book. In Londonthe commercial sector continues to recover with an increasing number of projectsin progress including the Trocadero in the West End together with the formerStock Exchange tower and No. 1 Wood Street in the City of London. Theresidential sector also provides an important source of work for all Groupcompanies with a number of substantial projects in progress including TabardSquare, South London and Lots Road, Chelsea. Further design work has beencarried out for News International and construction has recently started on thenew print facility at Broxbourne, Hertfordshire. Sustainability continues to bea high priority for the Group and is one of our principal core values. Recently,two Waterman designed projects have won sustainability awards: 3-8 WhitehallPlace, London and Red Kite House, Wallingford. Waterman Building Services continues, along with other group companies, toadvise on the major retail development at White City, West London. Otherprojects in progress include Watermark House in the City of London for UBS andextensive fit out work at Canary Wharf for CSFB. An encouraging number of newcommissions have been secured including offices and residential projects inLondon and Leeds, together with a number of data centres in the UK and overseas. The Group's environmental companies have continued to grow and will benefit fromthe acquisition of JP Envirosystems on 9 December 2005. The acquired company,based in London and Sheffield, advises its clients on operational permits,environmental management, and professional training. Waterman continues toprovide environmental impact assessments (EIA) which have assisted clients withsuccessful planning applications for major London projects including WatermarkHouse and One New Change. Waterman CPM, the Group's Cirencester basedconsultancy, has been appointed to advise the Shropshire Hills AONB Partnershipon boundary issues and specialist advice is also being provided to CheshireCounty Council. The Group's civil engineering company, Waterman Civils, has advised on a numberof new highway projects including Brierly Hill sustainable access network, theOakham bypass (A606) and a new bridge over the M25 at Dartford. In the railsector, projects include the new 240 hectare Parkside Rail terminal, nearWarrington and WhitecityTM where a new 16 track Central Line depot is underconstruction. Mapping services continue to be provided for Network Rail under aterm contract using Autorail software and a similar service is also beingprovided for the Metrolink tramway in Manchester. Other civil engineeringprojects include new facilities for the World Cargo Centre at Heathrow for BAand the Scottish Natural Heritage Building in Inverness. Group Activities - Overseas Moylan, the Group's Dublin based consultancy, has continued to gain market sharein the fast growing Irish consultancy sector. Turnover has increased by morethan 20% compared to the equivalent period in 2004 and additional staff havebeen recruited at senior and assistant levels. New projects include the PointDepot concert venue in Dublin, a major residential development at Cherrywood insouth Dublin and a business park near Dublin airport. A second Dublin office inSwords has been expanded to service the increased workload in the North Dublinarea. The Group has continued to develop its international operations during the sixmonth period, which has been marked by a number of significant new commissions.In Russia, Waterman has been appointed to design a major new office tower inMoscow City and in Dubai, new appointments include a data centre in theInternational Financial Centre and two mixed use tower buildings. In China, theGroup, acting as lead consultant, has won first prize in a major masterplanningcompetition to design part of the City of Tianjin. The new district known as BinHai New City will be developed into a modern city with a population of over 3million. The design embraces sustainability and low energy use and Waterman willhave priority status for future work. In Brussels, work is nearing completion onthe LEX 2000 conference centre for the EU and the new Tour Gaucheret project isnow in the design stage. In Australia, design work has recently been completedfor the Latitude East building in central Sydney and a new commission has beenwon to upgrade Sydney's historic Queen Victoria Building. Future Prospects As I reported in October last, year the urban regeneration sector continues toperform well, with Waterman advising on some of the UK's largest projects. TheGroup has a substantial long term order book which extends until 2013. Therehave also been encouraging signs of increased activity in all sectors and thebenefits of the divisional reorganisation in 2005 are now coming through. Acrossthe Group's operations and regions there remain many opportunities for futureorganic and acquisitive growth. Recent project wins in China, Russia and Dubaihave justified the decision to make strategic investments in these new markets.In the light of these encouraging developments, the Board views the future withconfidence. Roger FidgenChairman10 March 2006 INDEPENDENT REVIEW REPORT TO WATERMAN GROUP PLCFOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Introduction We have been instructed by the company to review the financial information forthe six months ended 31 December 2005 which comprises the consolidated interimbalance sheet as at 31 December 2005 and the related consolidated interimstatements of income, cash flows and changes in shareholders' equity for the sixmonths then ended and related notes. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. As stated in note 4, the next annual financial statements of the group will beprepared in accordance with accounting standards adopted for use in the European Union. This interim report has been prepared in accordance with the basis set out in Note 4. As explained in note 4, the accounting policies are consistent with those that the directors intend to use in the next annual financial statements. As explained in note 4, there is, however, a possibility that the directors may determine that some changes are necessary when preparing the full annual financial statements for the first time in accordance with accounting standards adopted for use in the European Union. The IFRS standards and IFRIC interpretations that will be applicable and adopted for use in the European Union at 30 June 2006 are not known with certainty at the time of preparing this interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion As disclosed in Note 8 to the interim financial information, the Group intendsto revalue its land and buildings, in accordance with the one-time opportunityavailable to it under IFRS 1.The revaluation has not yet been performed andconsequently the property is not stated at its revalued amount in the balancesheet at the date of transition to IFRS. On the basis of our review, with theexception of this matter, we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2005. PricewaterhouseCoopers LLPChartered AccountantsLondon13 March 2006 GROUP INCOME STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Six months to Six months to Twelve months to 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000 Revenue 40,276 35,658 72,342-------------------------------------------------------------------------------- Operating profit 2,176 1,994 4,061 Interest receivable 81 78 188Interest payable (247) (236) (488)-------------------------------------------------------------------------------- Profit before taxation 2,010 1,836 3,761 Taxation (711) (451) (1,299) -------------------------------------------------------------------------------- Profit for the financialperiod from continuingoperations 1,299 1,385 2,462-------------------------------------------------------------------------------- Profit attributableto-equity shareholders : 1,292 1,373 2,430 -minority interests 7 12 32-------------------------------------------------------------------------------- 1,299 1,385 2,462-------------------------------------------------------------------------------- Basic earnings per share 4.6p 5.0p 8.9p Diluted earnings pershare 4.5p 4.9p 8.6p Dividend paid per sharein the period 3.3p 3.0p 4.9p Proposed dividend pershare 2.0p 1.9p 5.2p GROUP BALANCE SHEETAS AT 31 DECEMBER 2005 As at As at As at 31 December 2005 31 December 2004 30 June 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000Non-current assets Property, plant andequipment 11,598 11,750 11,722Goodwill 11,191 10,447 10,955Intangible assets 306 322 365Loan and receivables 10 10 10-------------------------------------------------------------------------------- 23,105 22,529 23,052-------------------------------------------------------------------------------- Current assets Inventories 1,593 2,173 2,053Trade and otherreceivables 33,302 31,934 32,392Cash and cash equivalents 4,296 4,927 3,975-------------------------------------------------------------------------------- 39,191 39,034 38,420-------------------------------------------------------------------------------- Current liabilities Trade and other payables 22,848 24,418 22,598Financial liabilities 2,678 739 2,463Current tax liability 792 913 1,041Provisions 1,697 1,388 1,525-------------------------------------------------------------------------------- 28,015 27,458 27,627Non-current liabilities Financialliabilities-borrowings 5,089 6,616 5,314Provisions 1,566 874 1,262Deferred tax liability 290 326 303-------------------------------------------------------------------------------- 6,946 7,816 6,879 Total liabilities 34,961 35,274 34,506-------------------------------------------------------------------------------- Net assets 27,335 26,289 26,966================================================================================ Shareholders' Equity Share capital 2,824 2,782 2,791Share premium account 11,571 11,432 11,452Merger reserve 2,146 2,110 2,146Profit and loss account 10,448 9,310 9,873-------------------------------------------------------------------------------- Total shareholders'equity 26,989 25,634 26,262-------------------------------------------------------------------------------- Minority interest inequity 346 655 704-------------------------------------------------------------------------------- Total equity 27,335 26,289 26,966================================================================================ GROUP CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Six months Six months Twelve months to to to 31 December 31 December 30 June 2005 2004 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000 Cash flows from operating activities (see below) Cash generated fromoperations 3,119 3,483 5,731Interest paid (221) (236) (454)Interest received 81 78 188Tax paid (856) (80) (782)-------------------------------------------------------------------------------- Net cash from operating 2,120 3,245 4,683activities Cash flows from investing activitiesPurchase of subsidiaryundertakings (556) 0 (252)Deferred considerationpaid 0 0 (888)Net cash of subsidiariesacquired 0 0 (68)Purchase of intangiblefixed assets (64) (65) (264)Purchase of property,plant and equipment (PPE) (401) (635) (1,199)Proceeds from sale of PPE 25 13 40-------------------------------------------------------------------------------- Net cash used ininvesting activities (996) (687) (2,631) Cash flows from financing activitiesShare issues 152 11 36Repayments of borrowing (243) (199) (409)Repayments on financeleases (23) (30) (64)Equity dividends paid (930) (834) (1,363)Purchase of shares byWaterman Trustees Ltd 0 0 (96)--------------------------------------------------------------------------------Net cash used infinancing activities (1,044) (1,052) (1,896) Effect of exchange ratechanges 38 31 18-------------------------------------------------------------------------------- Net increase in cash andcash equivalents 118 1,537 174-------------------------------------------------------------------------------- Reconciliation of profit for thefinancial period to cash generated fromoperationsProfit for the financialperiod 1,299 1,385 2,462Taxation 711 451 1,299Interest payable 247 236 488Interest receivable (81) (78) (188)Amortisation of otherintangible assets 105 148 294Impairment of goodwill 0 0 177Depreciation 528 587 1,175Profit on disposal ofproperty, plant andequipment (PPE) 0 (7) (18)Shares granted under theSIP 0 0 104Changes in working capitalDecrease/(increase)inInventories 497 (834) (595)Increase in Trade andother receivables (771) (2,921) (3,274)Increase in Trade andother payables 285 4,092 2,972Increase in provisions 278 397 781Non-cash charge 18 27 54--------------------------------------------------------------------------------Cash generated fromoperations 3,116 3,483 5,731-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFOR THE SIX MONTHS ENDED 31 DECEMBER 2005 Profit Share Share Merger and Loss Minority Total Capital Premium Reserve Account Total Interest Equity Balance at 1July 2004 2,780 11,423 2,110 8,508 24,821 607 25,428Currencytranslationadjustments - - - 193 193 - 193Deferred taxcharge for theperiod - - - 43 43 - 43Share optioncharge for theperiod - - - 27 27 - 27----------------------------------------------------------------------------------------------------Income recognised directly inequity - - - 263 263 - 263New ordinary shares issued 2 9 - - 11 - 11Profit for the financial period - - - 1,373 1,373 48 1,421Dividend - - - -834 -834 - -834----------------------------------------------------------------------------------------------------Balance at 31December 2004 2,782 11,432 2,110 9,310 25,634 655 26,289 Currency translation adjustments - - - -43 -43 - -43Deferred tax charge for the period - - - 43 43 - 43Share option charge for the period - - - 27 27 - 27Adjustment in respect ofShare Incentive Plan - - - 6 6 - 6Profit on disposal of own shares - - - 2 2 - 2----------------------------------------------------------------------------------------------------Net income recogniseddirectly in equity - - - 35 35 - 35New ordinary shares issued 9 20 36 - 65 - 65Profit for the financial period - - - 1,057 1,057 49 1,106Dividend - - - -529 -529 - -529----------------------------------------------------------------------------------------------------Balance at 30June 2005 2,791 11,452 2,146 9,873 26,262 704 26,966 Currency translation adjustments - - - 81 81 - 81Deferred tax charge for the period - - - 114 114 - 114Share option charge for the period - - - 18 18 - 18Acquisition of 21% of minority interest insubsidiary undertaking - - - - - -366 -366----------------------------------------------------------------------------------------------------Net income /(expense)recogniseddirectly in equity - - - 213 213 -366 -153 New ordinary shares issued 33 119 - - 152 - 152Profit for the financial period - - - 1,292 1,292 8 1,300Dividend - - - -930 -930 - -930-----------------------------------------------------------------------------------------------------Balance at 31 December 2005 2,824 11,571 2,146 10,448 26,989 346 27,335===================================================================================================== NOTES TO THE INTERIM FINANCIAL INFORMATION 1 SEGMENTAL INFORMATION All revenue and operating profit arose from the Group's principal activity asengineering and environmental consultants. £6,702,000 (31 December 2004:£4,912,000 and 30 June 2005: £11,011,000) of revenue relates to overseasoperations in Ireland, Australia and mainland Europe. 2 TAXATION Taxation for the six months ended 31 December 2005 has been calculated at 31% ofUK profits, being the estimated effective rate for the year,together with £71,000 being the estimated overseas tax charge. 3 EARNINGS PER SHARE The basic earnings per share has been calculated on the profit attributable toshareholders and based on the weighted average of 28,029,803 shares in issueduring the period and ranking for dividend (31 December 2004: 27,810,635 and 30June 2005: 27,844,927). The fully diluted earnings per share also takes account of unexercised optionspotentially convertible into new ordinary shares and the calculation is based ona weighted average of 28,890,871 shares during the period (31 December 2004:28,479,035 and 30 June 2005: 28,574,478). 4 BASIS OF PREPARATION The Interim Statement for the six months ended 31 December 2005 which does notconstitute statutory accounts as defined in Section 240 of the Companies Act2005 was approved by the directors on 10 March 2006. The Interim Statement is unaudited but has been reviewed by the independentauditors. The disclosures made meet the requirements of the Listing Rules. Thedate of transition to IFRS from UK GAAP for the Group was 1 July2004.Information as to how this change impacted upon the Group is included inthe Interim Statement. The next annual financial statements of the Group will beprepared in accordance to accounting standards adopted for use in the European Union. It is possible that new standards may be applicable to the year end financial statements that have not yet been adopted in the European Union. The comparative figures for the financial year ended 30 June 2005 which arebased on the financial statements for that year, adjusted for the effects ofIFRS, are unaudited. The report of the auditors on the financial statements forthe year ended 30 June 2005 which were prepared in accordance with UK GAAP wasunqualified and did not contain a statement under section 237 (2) or (3) of theCompanies Act 1985.The financial statements for the financial year ended 30 June2005 have been delivered to Companies House. 5 EXPLANATION OF RECONCILING ITEMS BETWEEN UK GAAP AND IFRS In accordance with IAS 38 'Intangible Assets' certain software applications arereclassified as intangible assets under IFRS. In accordance with IFRS 2 'Share Based Payments' share awards are measured atfair value at grant date and recognised as an expense over the vesting period. In accordance with IAS 10 'Events after the Balance Sheet Date' dividendsdeclared after the balance sheet date cannot be recognised as a liability andhave been written back accordingly. Dividends paid in the period are recognisedin shareholders' equity. In accordance with IFRS 3 'Business Combinations' goodwill in respect ofacquisitions before 1 July 2004 together with any unamortised pre-existinggoodwill is no longer amortised but is subject to an annual impairment reviewand any amortisation recognised since 1 July 2004 is written back. In accordance with IAS 37 'Provisions, Contingent Liabilities and ContingentAssets' Liability Insurance Provisions are discounted at rates reflectingcurrent assessments of the time value of money. In accordance with IAS 11 ' Construction Contracts', Payments on Account andInventories together with Revenue and Movement in inventories have been grossedup which were previously permitted to be offset under UK GAAP. In accordance with IAS 12 'Income Taxes' deferred tax is calculated according tothe balance sheet liability method rather than the income statement liability method favoured under UK GAAP. In accordance with IAS 19 'Employee Benefits' full provision has been made forholiday pay as a short- term employee benefit. Group Cash Flow Statement - Under IFRS, cash flows are categorised under threeseparate headings rather than the seven headings under UK GAAP. Apart frompresentation, there are no material differences between the cash flow statementunder IFRS and the cash flow statement under UK GAAP. 6 WATERMAN GROUP PLC WEBSITE The maintenance of the website is the responsibility of the directors; the workcarried out by the auditors does not involve consideration of these matters andaccordingly, the auditors accept no responsibility for any changes that may haveoccurred to the interim report since it was initially presented on the website. 7 APPLICABLE LAW Legislation in the United Kingdom governing the preparation and dissemination offinancial information may differ from legislation in other jurisdictions. 8 PROPERTY REVALUATION The company is to revalue its freehold property to its fair value as at the dateof transition to IFRS as permitted under IFRS 1 'First time adoption ofInternational Financial Reporting Standards'. The values are not currentlyavailable at this time, however the revaluation will be incorporated in thetransitional balance sheet at 1 July 2004 when the financial statements for thisyear are reported. 9 DISTRIBUTION OF THE INTERIM REPORT Copies of the Interim Report are being sent to shareholders and are availablefrom the Company Secretary at the company's registered office at Pickfords Wharf, Clink Street, London SE1 9DG. This information is provided by RNS The company news service from the London Stock Exchange