WTM.L Regulatory News (WTM)

9 Mar 2007 07:02

Waterman Group PLC09 March 2007 WATERMAN REPORTS OVERSEAS GROWTH AS KEY MARKETS REMAIN BUOYANT Waterman Group plc, one of the UK's leading multidisciplinary engineering andenvironmental consultancies, today announces its interim results for the sixmonths to 31 December 2006. • Revenue increased to £47.7m (2005: £40.3m) • Profit before tax increased to £2.27m (2005: £2.01m) • Basic earnings per share of 4.9p (2005: 4.6p) • Interim dividend up to 2.2p (2005: 2.0p) • Revenue from overseas operations up 64% • Completion of AHW (Victoria) Australian acquisition • Major Urban Regeneration projects continue at: - whitecity, West London - Paradise Street, Liverpool - Cabot Development, Bristol - High Cross Quarter, Leicester - Princess Quay, Hull - Westgate Centre, Oxford - Eastside, Nottingham - Portsmouth Northern Quarter • Major new appointments including: - Kings Cross development, London - Napier Park, Luton - Bankside 4, London - 27 Poultry, London • Key international projects: - Festival City, Dubai - International Finance Centre, Dubai - Master plan - Tianjin, China - Office Tower, Moscow - New Holland, St Petersburg, Russia - Darling Island Development, Sydney, Australia - Royal Children's Hospital, Melbourne, Australia Commenting on the results, Bob Campbell, Managing Director said, "Waterman is in excellent health. Our markets are buoyant and we are winning abroad range of prestigious assignments both in the UK and overseas. The growthof our overseas operations has been particularly encouraging and revenue fromthese businesses now accounts for over a quarter of the Group's turnover. Wecontinue to make a number of strategic acquisitions which strengthen ourpresence in a number of new territories. "Looking forward, we are confident that we will continue to deliver an improvingperformance. Our markets are robust and we are making further investments in thenear term to maintain our growth momentum in these exciting markets." -ends- Date: 9th March 2007For 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 STATEMENT I am pleased to report that, in the six months to 31 December 2006, WatermanGroup achieved an increased pre tax profit of £2.27m (2005 : £2.01m) on revenueof £47.7m (2005 : £40.3m). Basic earnings per share increased to 4.9p (2005 :4.6p) and the Board has decided to increase the interim dividend to 2.2p pershare (2005 : 2.0p) payable on 19 April 2007 to shareholders on the register on23 March 2007. Group Activities - UK During the first six months of the financial year Waterman has achievedcontinued organic growth and good progress has been made on a number of the UK'slargest urban regeneration projects. These include Paradise Development inLiverpool, Cabot in Bristol, whitecity in London and High Cross Quarter inLeicester. In London, the inflow of new orders is most encouraging, as thecommercial and residential markets continue to strengthen. The Group's structural engineering specialist, Waterman Structures Ltd, hascontinued to perform strongly with major projects in progress which includePrincess Quay in Hull, Westgate in Oxford and the new Dakota Hotel atFarnborough. The order book of new work includes the first phase of the majorKings Cross development in London, a number of residential tower buildings andretail developments. Work on the main newsprint facility for News Internationalat Broxbourne in Hertfordshire is nearing completion. The Group's civil engineering activities have grown during the year, with anumber of important projects in progress, including two new stations for LondonUnderground Ltd and Parkside rail freight depot on Merseyside. The new CentralLine depot at White City for London Underground Ltd has been successfullycompleted and the new Oakham bypass (A606) was officially opened in January2007. A number of new commissions have been secured including Castlewood Grangeat junction 28 of the M1. A further AutorailTM commission has also been awarded,to update and extend the route maps and databases of the UK's rail network.Waterman Aspen, the Group's specialist outsourcing company, has continued togrow, with a number of new clients being added during the period. The environmental sector continues to expand with a further contribution from JPEnvirosystems (acquired in 2005), accompanied by sustained organic growth. Thedemand for Environmental Impact Assessments (EIA's) and Strategic EnvironmentalAssessments (SEA's) continues to grow and a number of major EIA's have recentlybeen secured in the UK and overseas including developments in London andMerseyside in the UK and Domdedovo in Russia. The emerging overseas markets arebecoming increasingly aware of environmental issues, and this is expected toprovide further opportunities for the Group in the future. Waterman CPM, theGroup's Cirencester based consultancy is advising on the Old Brewery inTadcaster and the redevelopment of South Crofty tin mine in Cornwall.Sustainable energy advice has been given for energy and carbon management andnew technology developments include advising on Europe's first synthetic dieselplant, producing fuel compliant to EU4 standard from up to 20 tons of wasteplastic per day. The building services sector has shown encouraging signs of growth during theperiod. Further progress has been made on a number of projects includingwhitecity and Watermark Place in London and a number of new commissions havebeen won across a wide range of sectors. The growing order book includes anumber of medical centres, hotels, leisure and industrial developments.Increasingly, advice is being provided to clients on renewable energy sourcesand low energy buildings for new developments and for retro fitting more energyefficient systems to existing buildings. Group Activities - Overseas The Group's revenue from overseas operations has increased by 64% compared tothe first six months of financial year 05-06 and provided 28% of the Group'stotal revenue. The principal areas of growth have been Ireland, Russia, Poland,the Emirates and Australia. Significant new projects have been awarded in Russiaand in the Emirates and a new office has been opened in Tianjin, China and newlarger offices have been established in Dubai, Warsaw and Moscow to accommodategrowing staff numbers. With the recent addition of AHW (Victoria), Waterman nowemploys 375 staff overseas out of a total headcount of 1550. The Group's Irish consultancy, Moylan, has continued to expand. Major projectsin progress include the Grange and City Junction in North Dublin. An encouragingnumber of new commissions have been won including Rathbourne Village, AdamstownNew Town and six new schools for the Department of Education and Science. I am pleased to draw shareholders' attention to the size and quality of ouroverseas projects which are fully commensurate with the Group's prestigious UKportfolio. Acquisitions On 1 November 2006 Waterman International (Asia) Pty Ltd acquired a 51% interestin AHW (Victoria) Pty Ltd, a multi discipline consulting engineer based inMelbourne, Australia. The company, which trades as Waterman AHW (Vic) Pty Ltd,is one of the leading consulting engineers in the state of Victoria and theacquisition will strengthen Waterman's access to the Australian and Asianmarkets. The company is currently trading in line with expectations and,following the acquisition, the Group now employs in excess of 100 staff inAustralia. Future Prospects Having achieved an increase in revenue of 18.4% during the first six months ofthe financial year and with a growing order book, the Group is well placed toachieve further growth in the future. New investment is planned in futureorganic and acquisitive growth in areas and operations which will deliverincreased revenue and profitability. The Group's presence in the world's fastgrowing markets is now well established and the development of Waterman as aninternational group will remain a high priority. Your board will continue toinvest in its operations in the UK and overseas and we view the future withconfidence. R.S. Fidgen9 March 2007 INDEPENDENT REVIEW REPORT TO WATERMAN GROUP PLCFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 IntroductionWe have been instructed by the company to review the financial information forthe six months ended 31 December 2006 which comprises the consolidated interimbalance sheet as at 31 December 2006 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' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 1. Review work performedWe 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 conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2006. PricewaterhouseCoopers LLPChartered AccountantsLondon9 March 2007 GROUP INCOME STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Restated(1) Six months to Six months to Twelve months to 31 December 2006 31 December 2005 30 June 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Revenue 47,702 40,276 83,680 -------- -------- -------- Earnings before interest, taxes,depreciation and amortisation (EBITDA) 3,173 2,809 5,897 Depreciation of property,plant and equipment (587) (526) (1,061)Amortisation of intangible assets (108) (105) (249) -------- -------- -------- Operating profit 2,478 2,178 4,587 Interest receivable 81 81 145Interest payable (293) (247) (518) -------- -------- -------- Profit before taxation 2,266 2,012 4,214 Taxation (749) (711) (1,421) -------- -------- --------Profit for the financial period from continuingoperations 1,517 1,301 2,793 -------- -------- -------- -------- -------- --------Profit attributable to - equity shareholders 1,412 1,294 2,749 - minority interests 105 7 44 -------- -------- -------- 1,517 1,301 2,793 -------- -------- -------- Basic earnings per share 4.9p 4.6p 9.7p Diluted earnings per share 4.8p 4.5p 9.5p Dividend paid per share 3.4p 3.3p 5.3p Proposed dividend per share 2.2p 2.0p 3.4p GROUP BALANCE SHEETAS AT 31 DECEMBER 2006 As at Restated(1) as at As at 31 December 2006 31 December 2005 30 June 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Non-current assets Goodwill 13,328 11,191 11,128Intangible assets 288 306 335Property, plant and equipment 13,543 13,673 13,536Loan and receivables 10 10 10 -------- -------- -------- 27,169 25,180 25,009 -------- -------- --------Current assets Trade and other receivables 41,329 33,534 35,611Cash and cash equivalents 4,898 4,296 3,332 -------- -------- -------- 46,227 37,830 38,943 -------- -------- --------Current liabilities Trade and other payables 28,896 23,184 24,264Financial liabilities - borrowings 2,472 2,678 1,251Current tax liability 895 792 583 -------- -------- -------- 32,263 26,654 26,098 -------- -------- --------Non-current liabilities Financial liabilities - borrowings 7,274 5,090 4,927Provisions 2,329 1,566 2,023Deferred tax liability 1,042 911 1,042 -------- -------- -------- 10,645 7,567 7,992 -------- -------- -------- -------- -------- --------Net assets 30,488 28,789 29,862 ======== ======== ======== Shareholders' Equity Share capital 2,868 2,824 2,856Share premium account 11,725 11,571 11,685Merger reserve 2,146 2,146 2,146Revaluation reserve 1,450 1,450 1,450Profit and loss account 11,670 10,452 11,361 -------- -------- -------- Total shareholders'equity 29,859 28,443 29,498 -------- -------- -------- Minority interest in equity 629 346 364 -------- -------- --------Total equity 30,488 28,789 29,862 ======== ======== ======== GROUP CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Restated(1) Six months to Six months to Twelve months to 31 December 2006 31 December 2005 30 June 2006 Unaudited Unaudited Audited £'000 £'000 £'000Cash flows from operating activities Cash generated from operations (see below) 1,989 3,116 5,899Interest paid (206) (221) (477)Interest received 81 81 145Tax paid (438) (856) (1,581) -------- ------- -------Net cash from operating activities 1,426 2,120 3,986 Cash flows from investing activities Purchase of subsidiary undertakings (net of cash acquired) (1,092) (556) (582)Part disposal of subsidiary undertaking 13 0 0Deferred consideration paid (50) 0 (1,272)Purchase of intangible fixed assets (35) (64) (150)Purchase of property, plant and equipment (PPE) (466) (401) (901)Proceeds from sale of PPE 10 25 32 -------- ------- -------Net cash used in investing activities (1,620) (996) (2,873) Cash flows from financing activities Share issues 52 152 298Proceeds from borrowing 2,304 0 0Repayments of borrowing (330) (243) (445)Repayments on finance leases (16) (23) (62)Equity dividends paid (972) (930) (1,499)Purchase of shares by Waterman Trustees Ltd (181) 0 (165) -------- ------- -------Net cash from / (used in)financing activities 857 (1,044) (1,873) Effect of exchange rate changes (34) 38 21 -------- ------- -------Net increase / (decrease)in cash and cash equivalents 629 118 (739) -------- ------- ------- Reconciliation of profit for the financial period to cash generated from operationsProfit for the financial period 1,517 1,301 2,793Taxation 749 711 1,421Interest payable 293 247 518Interest receivable (81) (81) (145)Amortisation of other intangible assets 108 105 249Depreciation 587 526 1,061(Profit)/loss on disposal of property,plant and equipment (PPE) (6) 0 1Loss on part disposal of subsidiary undertaking 13 0 0Shares granted under the Share Incentive Plan 188 0 144Non-cash charge 24 18 35Changes in working capital (Increase)/decrease in Trade and other receivables (4,875) 443 (1,683) Increase / (decrease) in Trade and other payables 3,187 (432) 785Increase in provisions 285 278 720 -------- ------- -------Cash generated from operations 1,989 3,116 5,899 -------- ------- ------- CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Restated(1) Profit Share Share Merger Revaluation and Loss Minority Total Capital Premium Reserve Reserve Account Total Interest Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Balance at 1 July 2005 2,791 11,452 2,146 1,450 9,875 27,714 704 28,418 Currency translation adjustments - - - - 81 81 1 82Deferred tax charge for the period - - - - 114 114 - 114Share based payments charge for the period - - - - 18 18 - 18Acquisition of 21% interest in subsidiary undertaking - - - - - - (366) (366)---------------------------------------------------------------------------------------------------------------------Net income recognised directly in equity - - - - 213 213 (365) (152)New ordinary shares issued 33 119 - - - 152 - 152Profit for the financial period - - - - 1,294 1,294 7 1,301Dividend - - - - (930) (930) - (930)---------------------------------------------------------------------------------------------------------------------Balance at 31 December 2005 2,824 11,571 2,146 1,450 10,452 28,443 346 28,789 Currency translation adjustments - - - - (60) (60) (19) (79)Deferred tax charge for the period - - - - 87 87 - 87Share based payments charge for the period - - - - 17 17 - 17Adjustment in respect of ShareIncentive Plan - - - - (21) (21) - (21)Net income recognised directly in equity - - - - 23 23 (19) 4 New ordinary shares issued 32 114 - - - 146 - 146Profit for the financial period - - - - 1,455 1,455 37 1,492Dividend - - - - (569) (569) - (569) ---------------------------------------------------------------------------------------------------------------------Balance at 30 June 2006 2,856 11,685 2,146 1,450 11,361 29,498 364 29,862 Currency translation adjustments - - - - (162) (162) 3 (159)Share based payments charge for the period - - - - 24 24 - 24Adjustment in respect of ShareIncentive Plan - - - - (1) (1) - (1)Profit on disposal of own shares - - - - 8 8 - 8Acquisition of 41% effective interest in subsidiary undertaking - - - - - - 138 138Disposal of 1%of share capital in subsidiary undertaking - - - - - - 19 19---------------------------------------------------------------------------------------------------------------------Net income recognised directly in equity - - - - (131) (131) 160 29 New ordinary shares issued 12 40 - - - 52 - 52Profit for the financial period - - - - 1,412 1,412 105 1,517Dividend - - - - (972) (972) - (972)---------------------------------------------------------------------------------------------------------------------Balance at 31 December 2006 2,868 11,725 2,146 1,450 11,670 29,859 629 30,488===================================================================================================================== NOTES TO THE INTERIM FINANCIAL INFORMATION 1 BASIS OF PREPARATIONThe consolidated financial statements have been prepared on the historical costbasis, with the exception of land and freehold property which have been modifiedto fair value at the date of transition to IFRS. The accounting policies used inthe Interim Report are consistent with those the directors intend to use in thenext annual financial statements except that the Group has yet to fully reviewthe intangible assets acquired as part of the AHW (Victoria) Pty Ltd purchase.This exercise is to be undertaken prior to the year end and revised goodwill andintangible assets will be reported at that date. As noted in the Interim Report at 31 December 2005, the Group elected to fairvalue its freehold property as at the date of transition to IFRS although thevalues were not available as at the time of that report. The revaluation has nowbeen incorporated into the balance sheet as at 31 December 2005 and increasesthe profit for that financial period by £2,000 as a result of the reduceddepreciation charge. In accordance with IAS 11 'Construction Contracts', balances have beenreclassified into amounts due from and to customers on long term contracts asthe directors consider that this disclosure is more appropriate than thatpreviously adopted at 31 December 2005. The Interim Statement for the six months ended 31 December 2006 which does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985 was approved by the directors on 9 March 2007. The Interim Statement is unaudited but has been reviewed by the independentauditors. The disclosures made meet the requirements of the Listing Rules. The comparative figures for the financial year ended 30 June 2006 which arebased on the financial statements for that year are audited. The report of theauditors on the financial statements for the year ended 30 June 2006 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 June2006 have been delivered to Companies House. 2 SEGMENTAL INFORMATIONAll revenue and operating profit arose from the Group's principal activity asengineering and environmental consultants. £13,378,000 (31 December 2005:£8,158,000 and 30 June 2006: £15,097,000) of revenue relates to overseasoperations in Ireland, Australia, China, the Emirates and Europe. £503,000 (31December 2005: £372,000 and 30 June 2006: £935,000) of operating profit relatesto overseas operations before the apportionment of group overheads. 3 TAXATIONTaxation for the six months ended 31 December 2006 has been calculated at 33% ofthe profits before taxation, being the estimated effective rate for the year,including £120,000 being the estimated overseas tax charge. The total effectiverate for the period has fallen due to the change in the mix of the profitsbetween the different jurisdictions in which the Group operates. 4 EARNINGS PER SHAREThe basic earnings per share has been calculated on the profit attributable toshareholders and based on the weighted average of 28,601,153 shares in issueduring the period and ranking for dividend (31 December 2005: 28,029,803 and 30June 2006: 28,243,803). The fully diluted earnings per share also takes account of unexercised optionspotentially convertible into new ordinary shares and shares conditionallyawarded in accordance with the Long Term Incentive Plan. The calculation isbased on a weighted average of 29,215,654 shares during the period (31 December2005: 28,890,871 and 30 June 2006: 29,012,872). 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 DISTRIBUTION OF THE INTERIM REPORTThis document is a summary of Waterman Group plc's Interim Report for the sixmonths ended 31 December 2006. Copies of the full Interim Report, in relation towhich the Independent Review Report was issued, are being sent to shareholdersand are available from the Company Secretary at the company's registered officeat Pickfords Wharf, Clink Street, London SE1 9DG. This information is provided by RNS The company news service from the London Stock Exchange