WTM.L Regulatory News (WTM)

11 Mar 2005 07:00

Waterman Group PLC11 March 2005 WATERMAN REPORTS HEALTHY PROGRESS WITH ENCOURAGING PROSPECTS FOR FUTURE GROWTH Waterman Group plc, one of the UK's leading multidisciplinary engineering andenvironmental consultancies, today announces its interim results for the sixmonths to 31 December 2004. • Work done increased to £34.7m (2003: £31.8m) • Profit before tax increased to £1.03m (2003: £0.86m) • Profit before tax and goodwill amortisation increased to £1.37m (2003: £1.19m) • Interim dividend maintained at 1.9p (2003: 1.9p) • Basic earnings per share increased to 2.3p (2003: 1.7p) • Basic earnings per share before goodwill amortisation 3.6p (2003: 2.9p) • Substantial long term order book • Strong balance sheet reflecting improved cash flow • Major Urban Regeneration projects continue at: - whitecityTM, West London - Paradise Street, Liverpool - The Shires, Leicester - Broadmead, Bristol - The Quadrant, Regent Street, London • Major new appointments including: - Former Stock Exchange Tower, City of London - Three major newsprint facilities for News International in the UK - Parkside rail freight development in NW England - Dun Laoghaire, Dublin • Key international projects: - LEX 2000 EU conference centre, Brussels - Festival City, Dubai - Masterplanning studies, Tianjin, China - Lessnaya and Sakharova, Moscow Commenting on the results, Bob Campbell, Managing Director said, " These results confirm that the Group is continuing its encouraging progress.The company has achieved a healthy increase in both work done and operatingprofit compared to the same period last year. The future prospects lookencouraging as confidence in the sector picks up and demand for the Group's keyconsultancy services continues its momentum. " We are delighted to be playing an important role in many of the UK's largesturban regeneration projects, which will provide long term secure income streamsfor the Group up to 2010. The winning of contracts such as the former StockExchange Tower and three major newsprint facilities for News International havecontributed to our substantial long term order book. Coupled with the Group'sappointment for pre-planning services for a number of projects in the City ofLondon, we are in an excellent position to benefit from renewed activity in thecommercial sector. " Major new appointments in Dubai, Moscow and China confirm all of the Group'sinternational subsidiaries are performing well. In view of our substantial orderbook, strong balance sheet and favourable conditions in our sector, we view ourfuture prospects with confidence. " -ends-Date: 11 March 2005 For further information contact:Waterman Group plc City ProfileBob Campbell, Managing Director Simon CourtenayGraham Hiscocks, Finance Director Oliver Winters020-7928-7888 020-7448-3244web: www.waterman-group.co.uk CHAIRMAN'S STATEMENT Waterman Group reports a pre tax profit of £1.03m (2003 : £0.86m) for the sixmonths to 31 December 2004. Work done during the period increased to £34.7m(2003 : £31.8m) and basic earnings per share were 2.3p (2003 : 1.7p). Basicearnings per share before goodwill amortisation were 3.6p (2003 : 2.9p). TheGroup's cash flow improved by £1.5m during the period and the Board has decidedto maintain the interim dividend at 1.9p per share payable on 20 April 2005 toshareholders on the register on 29 March 2005. Group Activities Major urban regeneration projects have provided a significant proportion of theGroup's workload during the first six months of the financial year. Theseprojects, which include whitecityTM in West London, Paradise Street inLiverpool, The Shires in Leicester, Broadmead in Bristol and The Quadrant,Regent Street in London, which with a total project value in excess of £1.5bn,will provide long term income to the Group for up to five years. Waterman'ssuccess in winning major urban regeneration projects has more than offset thereduction in commercial work. However, the commercial market is expected torecover and the Group has been appointed to advise on a number of new projectsin the City of London, including the refurbishment of the former Stock ExchangeTower, and is well placed to benefit in the future, as the market for commercialdevelopment recovers. In addition, Waterman has been appointed for the civil andstructural design of three major newsprint facilities for News International inthe UK. Civil and transportation engineering has become an increasingly important partof the Group's activities. New appointments include the lead consultancy for thenew Parkside multi-modal rail freight development in the North West of England.When completed, the project will be one of the largest logistics developments inthe UK. The Group's rail division has gained full 'Contractor's Assurance Case'certification from Network Rail. Projects in progress include a new depot andtwo stations at whitecityTM, West London, rail mapping for Network Rail's assetdata base and a number of other multi discipline rail related projects. TheGroup has been reassessed by the Highways Agency, and has been awarded animproved capability rating which has resulted in an increase in the number ofnew enquiries for work in the sector, which already includes the design of thenew Oakham bypass (A606) and major works to the A45 in the Midlands. A number oftraffic studies and flood risk assessments have been provided as part of majorenvironmental impact assessments. Waterman Aspen, the Group's outsourcingspecialist, continues to provide professional support to over 90 clients,principally local authorities and government agencies in the highways sector.The Group has been successful in securing a number of long term consultancyarrangements with local authorities, government agencies and transportationcompanies. These appointments, many of which are repeat orders, provide goodvisibility of future earnings in the sector. The environmental companies within the Group have performed strongly during theperiod, with increasing demand for environmental impact assessments (EIA's), forwhich specialist input and overall co-ordination services are being provided.Work has continued on many of the Group's major projects including ParadiseStreet in Liverpool, Lots Road in Chelsea and The Quadrant in London. Expertadvice has been provided to the Countryside Agency in defining the boundaries ofthe proposed South Downs National Park. The Public Inquiry was completed inNovember 2004 and further services are now being provided. The Group's mechanical and electrical consultancy, Waterman Gore, successfullycompleted the final stage of the HM Treasury Building in Whitehall, which hasbeen handed over for use by HM Customs and Excise. New project appointmentsinclude Nottingham Eastside and Bracknell Town Centre. Services provided toclients have been extended to include facilities management and advice toclients on energy labelling of their buildings. In Scotland, the Group is providing civil and structural design services for thenew Natural Heritage Building in Inverness and is providing structural advicefor a major PFI schools programme in West Lothian. Environmental studies havebeen carried out for a number of projects including Tradeston, Glasgow andArdersier near Inverness. A large number of heritage projects are also underway,involving repairs and restoration work to some of Scotland's historic buildings. Moylan, the Group's Dublin based consultancy, reports continuing buoyantconditions in the residential and construction sectors. New projects includefurther phases of the Ballymun Project and the City Junction project, both inthe Dublin area. Major projects in progress include Capital North (formerlyGrange New Town), Pelletstown, The Park Carrickmines and Dun Laoghaireresidential development. During the past year staff numbers have increased andadditional office accommodation has been leased. In continental Europe the Group's Belgian subsidiary, Waterman TCA, hasmaintained its position as one of the leading Belgian structural engineers.Major projects in progress include LEX 2000, a new conference centre for the EUin the centre of Brussels and Espace Kirchberg, a large multiphase officedevelopment in Luxembourg. In Moscow, work continues on a major industrialproject, together with retail, residential and office developments at Lessnayaand Sakharova with a total area in excess of 200,000m2 . There are signs thatthe local market is starting to move ahead strongly, as oil revenues are beingreinvested in real estate. In Dubai, which is one of the world's largestconstruction markets, the Group has been appointed to design the mechanical andelectrical services for two phases of a major new mixed use development, DubaiFestival City, which includes a major retail centre with 40,000m2 of offices, a770 room hotel and residential towers comprising 450 units. In China, Waterman has received new appointments including the master planningof a mixed use 425,000m2 site in Tianjin province, together with new portfacilities and a 10km long new riverfront development. The Group's Australian subsidiary, Waterman AHW, has reported increased levelsof activity during the last six months. A number of major projects have beensuccessfully completed during the period for clients which include Credit SuisseFirst Boston, Telstra, Vodafone, Cisco Systems and ANZ Bank. Work continues onprojects for Woolworth, Wattyl Paints and Nortel and new commissions include theBankstown shopping centre, in Sydney and design support services for the newDubai Office. Future Prospects The Group's order book includes many of the UK's largest urban regenerationprojects and a number of long term consultancy appointments for localauthorities and government agencies. These projects and appointments willprovide fee income to the Group for a period of up to five years. Your companyhas achieved an increase in work done and operating profit compared to the sameperiod last year and our strategy is to expand progressively and improve profitmargins by future organic growth, accompanied by the acquisition of suitablecomplementary businesses. In view of our substantial order book, strong balancesheet and favourable conditions in our sector, we view our future prospects withconfidence. W. MathiesonChairman11 March 2005 GROUP PROFIT & LOSS ACCOUNTFOR THE SIX MONTHS ENDED 31 DECEMBER 2004 Six months to Six months to Twelve months to 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited £'000 £'000 £'000 Work done 34,685 31,801 65,019 -------- -------- -------- Operatingprofit beforegoodwillamortisation 1,528 1,387 2,908 Goodwillamortisation (344) (324) (768) -------- -------- -------- Operatingprofit 1,184 1,063 2,140 Exceptionalitem - Profiton disposal offixed asset - - 258Interestreceivable 78 45 88Interestpayable (236) (247) (474) -------- -------- -------- Profit onordinaryactivitiesbeforetaxation 1,026 861 2,012 Taxation (362) (355) (605) -------- -------- -------- Profit onordinaryactivitiesafter taxation 664 506 1,407 -------- -------- -------- Equityminorityinterest (12) (35) 1 -------- -------- -------- Profit onordinaryactivitiesafter taxationand minorityinterest 652 471 1,408 -------- -------- -------- Dividends (529) (528) (1,362) Profit/ (loss)taken toreserves 123 (57) 46 -------- -------- -------- Basic earningsper share 2.3p 1.7p 5.1p Dilutedearnings pershare 2.3p 1.7p 5.0p Basic EPSbeforegoodwillamortisation 3.6p 2.9p 7.8p Diluted EPSbeforegoodwillamortisation 3.5p 2.8p 7.7p Dividend pershare 1.9p 1.9p 4.9p -------- -------- -------- STATEMENT OF TOTAL GROUP RECOGNISED GAINSAND LOSSES Profit for thefinancial period 652 471 1,408Exchangeadjustment 193 60 (123) -------- -------- -------- Total gainsrecognised forthe period 845 531 1,285 GROUP BALANCE SHEETAS AT 31 DECEMBER 2004 As at As at As at 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited £'000 £'000 £'000Fixed assets Intangible assets 10,103 10,344 10,340Tangible assets 12,072 12,370 12,084Investments 10 10 10 ---------- -------- -------- 22,185 22,724 22,434 ---------- -------- --------Current assets Work in progress 1,511 3,264 925Debtors (includingamounts recoverable oncontracts) 32,240 26,095 29,128Cash at bank and in hand 4,927 1,926 3,862 ---------- -------- -------- 38,678 31,285 33,915 ---------- -------- -------- Creditors (amountsfalling due within oneyear) (27,327) (20,686) (23,418) ---------- -------- --------Net current assets 11,351 10,599 10,497 ---------- -------- -------- Total assets less currentliabilities 33,536 33,323 32,931 Creditors (amountsfalling due after morethan one year) (6,616) (7,016) (6,809) Provisions forliabilities and charges (928) (551) (505) ---------- -------- --------Net assets 25,992 25,756 25,617 ========== ======== ======== Capital and reserves Called up share capital 2,782 2,780 2,780Share premium account 11,432 11,423 11,423Merger reserve 2,110 2,110 2,110Profit and loss account 9,013 8,689 8,697 -------- -------- --------Equity shareholders'funds 25,337 25,002 25,010 -------- -------- -------- Equity minority interest 655 754 607 -------- -------- --------Capital employed 25,992 25,756 25,617 ======== ======== ======== GROUP CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2004 Six months to Six months to Twelve months 31 December 31 December to 30 June 2004 2003 2004 Unaudited Unaudited Audited £'000 £'000 £'000 Net cash inflow fromoperating activities (seebelow) 3,483 1,226 5,122 Returns on investments andservicing of financeInterest received 78 45 88Interest paid (231) (247) (463)Dividends paid to equityminority interest - - (50)Interest paid on hirepurchase contracts (5) - (11) --------- ------- ------- (158) (202) (436) --------- ------- ------- Taxation paid (80) (186) (519) --------- ------- ------- Capital expenditure and financialinvestmentPurchase of tangiblefixed assets (700) (382) (1,044)Proceeds from sale oftangible fixed assets 13 2 387 --------- ------- ------- (687) (380) (657) --------- ------- -------AcquisitionsPurchase of subsidiaryundertakings - (1,483) (1,415)Cash acquired withsubsidiary - 38 38 --------- ------- ------- - (1,445) (1,377) --------- ------- ------- Equity dividends paid (834) (832) (1,360) --------- ------- -------Cash inflow/ (outflow)before financing 1,724 (1,819) 773 FinancingIssue of ordinary sharecapital 11 20 20Receipt of bank loans - 128 128Repayment of loans (199) (194) (402)Capital element of hirepurchase payments (30) (55) (87)Purchase of shares byWaterman Trustees Limited - - (89)Sale of shares byWaterman Trustees Limited - - 91 --------- ------- ------- (218) (101) (339) --------- ------- -------Increase/ (decrease) incash in the period 1,506 (1,920) 434 --------- ------- ------- Reconciliation of operatingprofit to net cash inflow fromoperating activitiesOperating profit 1,184 1,063 2,140Profit on disposal offixed assets (7) (1) (2)Depreciation 735 766 1,552Goodwill amortisation 344 324 768Shares granted under theprofit sharing scheme - - 86Movement in work inprogress (504) 1,168 3,391Movement in debtors (2,921) (5,398) (8,552)Movement in creditors 4,229 3,647 6,128Movement in provisionsfor liabilities andcharges 423 (343) (389) --------- ------- -------Net cash inflow fromoperating activities 3,483 1,226 5,122 --------- ------- ------- NOTES TO THE INTERIM FINANCIAL INFORMATION 1 SEGMENTAL INFORMATIONAll work done and operating profit arose from the Group's principal activity asengineering and environmental consultants. £5,590,000 (31 December 2003:£4,813,000 and 30 June 2004: £10,065,000) of work done relates to overseasoperations in Ireland, Australia and mainland Europe. 2 TAXATIONTaxation for the six months ended 31 December 2004 has been calculated at 31% ofUK profits before goodwill, being the estimated effective rate for the year,together with £70,000 being the estimated overseas tax charge. 3 EARNINGS PER SHAREThe basic earnings per share has been calculated on the profit attributable toshareholders and based on the weighted average of 27,810,635 shares in issueduring the period and ranking for dividend (31 December 2003: 27,782,718 and 30June 2004: 27,792,927). 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 28,479,035 shares during the period (31 December 2003:28,398,477 and 30 June 2004: 28,419,608). 4 BASIS OF PREPARATIONThe interim financial information has been prepared on a basis which isconsistent with the accounting policies adopted in the financial statements forthe year ended 30 June 2004. All results relate to continuing operations. The financial information relating to the year ended 30 June 2004 is an extractfrom the full group accounts, which have been filed with the Registrar ofCompanies. The report of the auditors on these accounts was unqualified. 5 WATERMAN GROUP PLC WEBSITEThe 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. 6 APPLICABLE LAWLegislation in the United Kingdom governing the preparation and dissemination offinancial information may differ from legislation in other jurisdictions. 7 ANALYSIS OF NET DEBT As at Other As at 30 June 2004 non-cash Exchange 31 December 2004 Audited Cashflow changes movements Unaudited £'000 £'000 £'000 £'000 £'000 --------- ------- ------- -------- ------------ Cash at bank andin hand 3,862 1,034 - 31 4,927Bank overdrafts (512) 472 - - (40) --------- ------- ------- -------- ------------ 3,350 1,506 - 31 4,887 Debts due withinone year (1,486) 199 (165) (72) (1,524)Debts due afterone year (6,698) - 165 - (6,533)Hire purchase duewithin one year (61) 30 (28) (4) (63)Hire purchase dueafter one year (111) - 28 - (83) --------- ------- ------- -------- ------------ (8,356) 229 - (76) (8,203) --------- ------- ------- -------- ------------ Total (5,006) 1,735 - (45) (3,316) --------- ------- ------- -------- ------------ 8 RECONCILIATION OF NET CASHFLOW TO NET DEBT As at As at As at 31 December 31 December 30 June 2004 2004 2003 Unaudited Unaudited Audited £'000 £'000 £'000 ------------ ------------ ------------ Increase /(decrease) incash in the period 1,506 (1,920) 434Reduction in borrowings 229 682 334Inception of hirepurchase leases - (24) (18)Exchange adjustments (45) (6) 34 ------------ ------------ ------------ Change in net debt 1,690 (1,268) 784 Net debt at 1 July 2004 (5,006) (5,790) (5,790) ------------ ------------ ------------Net debt at 31 December2004 (3,316) (7,058) (5,006) ------------ ------------ ------------ 9 DISTRIBUTION OF THE INTERIM REPORT Copies of the Interim Report are being sent to shareholders and are availablefrom the Company's registered office at Pickfords Wharf, Clink Street, LondonSE1 9DG. This information is provided by RNS The company news service from the London Stock Exchange