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TIDMWTM
RNS Number : 1598Y
Waterman Group PLC
28 February 2012
WATERMAN GROUP PLC
Interim Results Announcement for the Six Months to 31 December 2011
SOLID PERFORMANCE AS DIVERSIFICATION STRATEGY MAKES PROGRESS
Waterman Group plc, the international engineering and environmental consultancy, today announces its interim results for the six months to 31 December 2011.
Financial Highlights Note HY12 HY11
unaudited unaudited
GBP36.0m GBP36.5m
* Revenue
1 GBP4.0m GBP1.4m
* Earnings before interest, tax, depreciation and
amortisation
1 GBP3.0m GBP0.5m
* Profit before tax and amortisation of acquired
intangible assets
(GBP0.2m) (GBP0.3m)
* Amortisation of acquired intangible assets
1 GBP2.8m GBP0.2m
* Profit before tax
GBP0.5m GBP0.5m
* Profit before tax, exceptional items and
amortisation of intangible
assets
GBP3.5m (GBP8.9m)
* Net funds/(debt)
* Net asset value per share 118p 111p
* Interim dividend per share 0.1p 0.1p
Note
1. The pre tax profits include an exceptional profit of GBP2.5m (2011: GBP8k charge).
Commenting on the results, Nick Taylor, Chief Executive said:-
" We are pleased to have achieved these results in a market which continues to be challenging. The Company has continued to win important contracts and we have secured 90% of our forecast revenue for this financial year."
" Positive progress has been made on our strategic investments in new and existing markets."
" The company has enhanced its financial position with no net debt following the sale and leaseback of its head office in London. In conclusion, the Company is in good health and we look forward to the future with confidence."
-ends-
Date: 28 February 2012
For further information contact:
Waterman Group plc City Profile
Nick Taylor, Chief Executive Jonathan Gillen
Alex Steele, Finance Director Simon Courtenay
020-7928-7888 020-7448-3244
web: www.watermangroup.com
INTERIM MANAGEMENT REPORT
Trading conditions for Waterman Group in the first half of the financial year have generally been in line with our expectations. The uncertainty in the Eurozone has impacted on our UK revenue, however our overseas operations have experienced a balancing increase in revenue, particularly in Australia.
We continue to take actions to reduce Group overheads and vacate under-utilised office accommodation as leases expire. Although the main benefits from these cost reductions will materialise in future years we believe that these steps position the Group appropriately and will enable Waterman to capitalise on any opportunities as they arise.
We have reduced our employee numbers by 4% over the last six months to 1007 with an associated one off charge of GBP0.46m being absorbed within our declared profit for the six months to 31 December 2011. As described below, this largely reflects the strategic decision to reduce exposure to our Civil and Transportation businesses in response to subdued activity and margin pressure.
The sale and leaseback of Pickfords Wharf, Waterman's head office in London, in November last year has enhanced our financial position, de-gearing the business and leaving the Group with net funds of GBP3.5m at 31(st) December 2011.
It is pleasing to report that we have won a number of important contracts in recent months including two new hospitals in Victoria, Australia; additional projects for The Crown Estate in St. James's London; a Partnering Term Contract to provide engineering and consultancy services to the London Borough of Bexley for four years; and a three year framework with HS1 to provide consultancy services on the infrastructure associated with the High Speed Rail Link from St. Pancras to the Channel tunnel.
Results
In the six months to December 2011, Waterman Group achieved revenue of GBP36.0m (2010: GBP36.5m). The adjusted pre tax profit is GBP3.0m (2010: GBP0.5m) and this includes an exceptional profit of GBP2.5m (2010: GBP8k charge). The exceptional profit is generated from the sale and leaseback in November 2011 of the London head office occupied by the Group less other property, PPE and restructuring costs. The adjusted pre tax profit before exceptional items is GBP0.5m (2010: GBP0.5m). The adjusted pre tax profit excludes GBP0.2m (2010: GBP0.3m) for amortisation of acquired intangible assets.
Waterman continues to trade at a substantial discount to its net and tangible net asset value. As at 31 December 2011 total net assets per share were 118p (2010: 111p) and tangible net assets per share were 60p (2010: 53p).
The interim dividend will be 0.1p per share (2010: 0.1p).
Strategy
We have continued to make progress on our strategy to diversify our operations. In Australia, we have recruited two new directors who are targeted to generate growth in the telecommunications, ICT and defence markets. In Scotland, we continue to expand our expertise and resources in the wind turbine, traditional power generation and transmission markets. These are sectors where we predict there will be significant growth that will lead to plenty of opportunities.
Our Civil and Transportation businesses in the UK have been amalgamated to form a more focused and sustainable operation with concentrated centres of excellence. Following our success on the Bromley term contract and HS1 framework, we are currently tendering further local authority frameworks to provide long term consistent workload to our teams in the infrastructure sector.
In conjunction with the above initiatives, we have reinforced our position in our core property markets which provide 65% of our revenue. We have invested in the training of our employees in the use of Building Information Modelling (BIM) thereby meeting the UK Government's requirements that designers on all public sector projects must be 3D BIM compliant by 2016. Our expertise in the use of this technology will enable Waterman to compete effectively for future government projects.
Business Review
UK
The UK business provides 68% of Group revenue, with two thirds of this coming from the private property sector. The Eurozone issues have delayed some of our projects moving to construction in the current period as the uncertainty over property finance and tenant demand has persisted. Our planning team which is involved in the preparation of environmental impact assessments, has been very busy, particularly on London projects, throughout the period. As the economy improves we anticipate that more projects will move into detailed design and construction.
The retail sector has provided many opportunities for our due diligence and masterplanning teams as assets are sold. We have acted for several clients who were acquiring retail property portfolios and this has resulted in follow on commissions associated with the refurbishment of the existing town centre developments.
In partnership with PwC, Waterman has jointly published a guidance paper on Responsible Investment on behalf of the British Venture Capital Association. Waterman has also recently launched a new Sustainability Group, "Future 360", to focus on improving the sustainability performance of projects.
As one of the key areas of focus in our strategy to broaden the business, it is pleasing to report that our Power and Energy teams continue to make progress in the renewable sectors. We have acted as lead consultant on the planning applications for over 150 separate single rural wind turbines. This experience should result in further commissions in this expanding sector.
The Civil and Transportation markets have remained subdued, however we welcome the Chancellor's Autumn statement regarding future investment in transportation and education. Margins remain low in the highways sector and we have responded by reducing our exposure to this area and adopting a more selective approach to future contracts. In October 2011, our civils team were appointed by the London Borough of Bexley under a Partnering Term contract to provide engineering and consultancy services for the next four years.
Recent project appointments include the conversion of Hampden Park stadium in Glasgow for the 2014 Commonwealth Games. Following the successful completion of Quadrant 3, a 40,000m(2) project in Regent Street, London, we have been appointed to design five further major developments for The Crown Estate in Regent Street and St. James's. This area of London is still very buoyant with good tenant demand for high quality space. In Vauxhall, London we have continued to support the planning applications for five significant new developments including the US Embassy.
Overseas
Our overseas operations consist of four resource hubs which cover Australia, CIS, Europe and the Middle East.
We have progressed with the detailed design of retail, commercial and residential projects in Russia and Kazakhstan where construction has commenced on site.
In Europe, we are involved in the planning and scheme design of a range of projects and it is anticipated that further commissions for the construction phase will be forthcoming in the future.
In the Middle East, the period saw the planned reduction of site staff on the 460,000m(2) Al Muneera development at Al Raha Beach in the UAE which has recently reached completion after four years in construction. We continue to provide facilities management services on the Yas Marina Formula 1 race track and on the Injazat Data Centre which Waterman previously designed. This data centre is the only Tier IV facility in the Middle East and we provide operational and maintenance support on this complex.
In Australia progress has been good. Following a period of delay in government investment in the healthcare sector the Group is pleased to report that it has been appointed on the design of several additional new hospitals. These projects include the Victorian Eye and Ear Hospital and the Albury Wodonga Cancer Centre which are both in the state of Victoria.
As part of the Australian government's commitment to install a high speed broadband connection to 93% of homes, we have surveyed over 100 telephone exchanges to report on the necessary works to accommodate the new fibre optic cabling and distribution network. This work has involved staff from each of our three offices in Sydney, Melbourne and Brisbane and further commissions are now being received to upgrade many of the telephone exchanges.
Property
On 17(th) November 2011 the Group completed the sale and leaseback of Waterman's freehold property, Pickfords Wharf, Clink Street, London for the sum of GBP11.9m. Full details of the disposal were previously announced to shareholders on 18(th) October 2011 and the transaction was approved at the shareholders General Meeting on 10(th) November 2011.
Dividend
The adjusted earnings per share before amortisation of acquired intangible assets and exceptional items are 0.52p (2010: 0.48p).
The Board has decided to pay a maintained interim dividend of 0.1p per share (2010: 0.1p) payable on 4(th) April 2012 to shareholders on the register on 9(th) March 2012.
Looking forward, the Board's intention is to restore a conventional one third/two thirds split between interim and final dividend payments, and to set dividend payments at a level which they judge to be sustainable in the context of group profits and the renewed financial strength of the business. The Board will recommend the level of the final dividend payment having regard to these criteria.
Outlook
Although it is clear that financial uncertainty persists in the global economy, as reflected in the modest rate of recovery in many markets, the Board believes that Waterman is well positioned to capitalise on the opportunities that any recovery will bring.
Waterman has secured approximately 90% of forecast revenue for the current financial year which is a similar level to twelve months ago, and demonstrates the Group's underlying resilience. Waterman has continued to win work in its core property markets rebuilding its future order book. Taken together with the planned diversification into new and expanding markets such as power, renewable energy, utilities, data and telecommunications these key sectors provide a greater breadth to our business.
Our operations in the UK and Australia generate 84% of our revenue. Whilst both these markets remain competitive, it is pleasing to note that we continue to win our market share of new opportunities.
The Board looks to the future with confidence. Waterman retains its strong brand, and our loyal and experienced employees are our key asset. The strength of our client relationships will continue to assist us in securing work in the future as the economy and tenant demand recovers.
On behalf of the Board, I would like to express our appreciation to all our clients and staff for their continued support.
Roger Fidgen
Chairman
28 February 2012
Independent Review Report to Waterman Group plc
for the six months ended 31 December 2011
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial information for the six months ended 31 December 2011, which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Shareholders' Equity and Notes to Financial Information. We have read the other information contained in the half-yearly financial information and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial information is the responsibility of, and has been approved, by the directors. The directors are responsible for preparing the half-yearly financial information in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial information has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial information based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial information for the six months ended 31 December 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
1 Embankment Place
London
WC2N 6RH
28 February 2012
Consolidated Income Statement
for the six months ended 31 December 2011
--------------------------------------------------------------------------------------
Unaudited Unaudited
Six months Six months to
to 31 December 2010
Notes 31 December Restated
2011 GBP'000
GBP'000
------------------------------------------ ------- ------------- ------------------
Revenue-continuing operations 4 36,017 36,530
------------------------------------------ ------- ------------- ------------------
Employee benefits expense (21,981) (24,119)
------------------------------------------ ------- ------------- ------------------
Other operating charges pre
exceptional items (12,859) (11,027)
Exceptional items 6 2,857 (8)
------------------------------------------ ------- ------------- ------------------
Other operating charges post
exceptional items (10,002) (11,035)
------------------------------------------ ------- ------------- ------------------
Operating expenses (31,983) (35,154)
------------------------------------------ ------- ------------- ------------------
Earnings before interest, taxes,
depreciation and amortisation
(EBITDA) 4,034 1,376
------------------------------------------ ------- ------------- ------------------
Depreciation of property, plant
and equipment pre exceptional
items (419) (578)
------------------------------------------ ------- ------------- ------------------
Exceptional items 6 (54) -
------------------------------------------ ------- ------------- ------------------
Depreciation of property, plant
and equipment post exceptional
items (473) (578)
------------------------------------------ ------- ------------- ------------------
Amortisation of other intangible
assets (300) (387)
------------------------------------------ ------- ------------- ------------------
Operating profit pre exceptional
items 458 419
Exceptional items 2,803 (8)
------------------------------------------ ------- ------------- ------------------
Operating profit post exceptional
items 4 3,261 411
------------------------------------------ ------- ------------- ------------------
Interest payable pre exceptional
items (244) (232)
------------------------------------------ ------- ------------- ------------------
Exceptional items 6 (284) -
------------------------------------------ ------- ------------- ------------------
Interest payable post exceptional
items (528) (232)
------------------------------------------ ------- ------------- ------------------
Interest receivable 50 29
------------------------------------------ ------- ------------- ------------------
Profit before taxation 2,783 208
------------------------------------------ ------- ------------- ------------------
Taxation 5 (232) (67)
------------------------------------------ ------- ------------- ------------------
Profit for the financial period
from continuing operations (see
below) 2,551 141
------------------------------------------ ------- ------------- ------------------
Profit / (loss) attributable
to - Owners of the parent 2,247 (42)
------------------------------------------ ------- ------------- ------------------
Profit attributable to - Non-controlling
interest 304 183
------------------------------------------ ------- ------------- ------------------
2,551 141
------------------------------------------ ------- ------------- ------------------
Basic earnings / (loss) per
share 7 7.4p (0.1p)
------------------------------------------ ------- ------------- ------------------
Diluted earnings / (loss) per
share 7 7.4p (0.1p)
------------------------------------------ ------- ------------- ------------------
Dividend paid per share 8 0.0p 0.0p
------------------------------------------ ------- ------------- ------------------
Dividend proposed per share 8 0.1p 0.1p
------------------------------------------ ------- ------------- ------------------
Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2011
--------------------------------------------------------------------------------------
Profit for the period (see above) 2,551 141
------------------------------------------ ------- ------------- ------------------
Other comprehensive (expense)
/ income :
------------------------------------------ ------- ------------- ------------------
Currency translation adjustments (13) 941
------------------------------------------ ------- ------------- ------------------
Employee Benefit Trust (EBT)
Profit 11 15
------------------------------------------ ------- ------------- ------------------
Change in valuation of own shares
held by EBT (11) 28
------------------------------------------ ------- ------------- ------------------
Other comprehensive (expense)
/ income for the period (net
of tax): (13) 984
------------------------------------------ ------- ------------- ------------------
Total comprehensive income for
the period 2,538 1,125
------------------------------------------ ------- ------------- ------------------
Total comprehensive income attributable
to -
Owners of the parent 2,076 449
------------------------------------------ ------- ------------- ------------------
Total comprehensive income attributable
to -
Non controlling interest 462 676
------------------------------------------ ------- ------------- ------------------
Consolidated Balance Sheet
as at 31 December 2011
-------------------------------------- --------------------------------------------
Unaudited Unaudited Audited
As at As at As at
31 December 31 December 30 June 2011
2011 2010
Restated GBP'000
Notes GBP'000 GBP'000
----------------------------- ------- ------------- ------------- --------------
ASSETS
----------------------------- ------- ------------- ------------- --------------
Non-current assets
----------------------------- ------- ------------- ------------- --------------
Goodwill 17,174 17,154 17,193
----------------------------- ------- ------------- ------------- --------------
Other intangible assets 9 705 1,302 968
----------------------------- ------- ------------- ------------- --------------
Property, plant and
equipment 9 2,449 10,369 10,239
----------------------------- ------- ------------- ------------- --------------
Loan and receivables 10 10 10
----------------------------- ------- ------------- ------------- --------------
Deferred taxation asset 1,184 305 846
----------------------------- ------- ------------- ------------- --------------
21,522 29,140 29,256
----------------------------- ------- ------------- ------------- --------------
Current assets
----------------------------- ------- ------------- ------------- --------------
Trade and other receivables 10 34,636 36,959 35,866
----------------------------- ------- ------------- ------------- --------------
Cash and cash equivalents 5,845 1,657 1,411
----------------------------- ------- ------------- ------------- --------------
40,481 38,616 37,277
----------------------------- ------- ------------- ------------- --------------
Total assets 62,003 67,756 66,533
----------------------------- ------- ------------- ------------- --------------
LIABILITIES
----------------------------- ------- ------------- ------------- --------------
Current liabilities
----------------------------- ------- ------------- ------------- --------------
Trade and other payables (20,430) (19,310) (19,538)
----------------------------- ------- ------------- ------------- --------------
Financial liabilities
- borrowings 11 (426) (1,237) (1,265)
----------------------------- ------- ------------- ------------- --------------
Current taxation liability (281) - -
----------------------------- ------- ------------- ------------- --------------
(21,137) (20,547) (20,803)
----------------------------- ------- ------------- ------------- --------------
Non-current liabilities
----------------------------- ------- ------------- ------------- --------------
Financial liabilities
- borrowings 11 (1,904) (9,365) (8,764)
----------------------------- ------- ------------- ------------- --------------
Provisions 12 (2,670) (3,487) (2,647)
----------------------------- ------- ------------- ------------- --------------
Deferred taxation liability - (91) -
----------------------------- ------- ------------- ------------- --------------
(4,574) (12,943) (11,411)
----------------------------- ------- ------------- ------------- --------------
Total liabilities (25,711) (33,490) (32,214)
----------------------------- ------- ------------- ------------- --------------
Net assets 36,292 34,266 34,319
----------------------------- ------- ------------- ------------- --------------
SHAREHOLDERS' EQUITY
----------------------------- ------- ------------- ------------- --------------
Share capital 13 3,076 3,076 3,076
----------------------------- ------- ------------- ------------- --------------
Share premium reserve 11,881 11,881 11,881
----------------------------- ------- ------------- ------------- --------------
Merger reserve 14 3,144 3,144 3,144
----------------------------- ------- ------------- ------------- --------------
Revaluation reserve 586 584 600
----------------------------- ------- ------------- ------------- --------------
Retained earnings 14,912 12,982 12,852
----------------------------- ------- ------------- ------------- --------------
33,599 31,667 31,553
----------------------------- ------- ------------- ------------- --------------
Non-controlling interest 2,693 2,599 2,766
----------------------------- ------- ------------- ------------- --------------
Total equity 36,292 34,266 34,319
----------------------------- ------- ------------- ------------- --------------
Consolidated Cash Flow Statement
for the six months ended 31 December 2011
----------------------------------------------------------------------
Unaudited Unaudited
Six months Six months
to to
31 December 31 December
2011 2010
Notes GBP'000 GBP'000
------------------------------ -------- ------------- -------------
Cash flows from operating
activities
------------------------------ -------- ------------- -------------
Cash generated from /
(used in ) operations 15a 1,833 (1,777)
------------------------------ -------- ------------- -------------
Interest paid (526) (229)
------------------------------ -------- ------------- -------------
Interest received 50 29
------------------------------ -------- ------------- -------------
Taxation paid (70) (261)
------------------------------ -------- ------------- -------------
Net cash from / (used
in ) operating activities 1,287 (2,238)
------------------------------ -------- ------------- -------------
Cash flows from investing
activities
------------------------------ -------- ------------- -------------
Purchase of property,
plant and equipment (PPE)
and other intangible assets (149) (89)
------------------------------ -------- ------------- -------------
Net proceeds from sale
of PPE and other intangible
assets 11,525 -
------------------------------ -------- ------------- -------------
Net cash from / (used
in) investing activities 11,376 (89)
------------------------------ -------- ------------- -------------
Cash flows from financing
activities
------------------------------ -------- ------------- -------------
Repayment of borrowing (7,675) (691)
------------------------------ -------- ------------- -------------
Repayments on finance
leases (23) (25)
------------------------------ -------- ------------- -------------
Equity dividends paid-to
owners of the parent - -
------------------------------ -------- ------------- -------------
-to non-controlling interest (535) (383)
------------------------------ -------- ------------- -------------
Net cash used in financing
activities (8,233) (1,099)
------------------------------ -------- ------------- -------------
Net increase / (decrease)
in cash, cash equivalents
and overdrafts 4,430 (3,426)
------------------------------ -------- ------------- -------------
Effect of exchange rate
changes 4 175
------------------------------ -------- ------------- -------------
Net increase / (decrease)
in cash, cash equivalents
and overdrafts 15b 4,434 (3,251)
------------------------------ -------- ------------- -------------
Consolidated Statement of Changes in Shareholders' Equity (Unaudited)
as at 31 December 2011
----------------------------------------------------------------------------------------------------------------------
Profit Total
Share Revaluation and loss shareholders'
Share Premium Merger Minority Total
capital reserve Reserve Reserve reserve equity Interest Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Balance at 1
July 2010 3,076 11,881 3,144 584 12,806 31,491 2,306 33,797
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Currency
translation
adjustments - - - - 448 448 493 941
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Change in
valuation
of own
shares held
by Employee
Benefit
Trust - - - - 28 28 - 28
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Employee
Benefit
Trust
Profit - - - - 15 15 - 15
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Net income
recognised
directly in
equity - - - - 491 491 493 984
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
(Loss) /
profit for
the
financial
period - - - - (42) (42) 183 141
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Dividend - - - - (273) (273) (383) (656)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Balance at
31 December
2010 3,076 11,881 3,144 584 12,982 31,667 2,599 34,266
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Currency
translation
adjustments - - - - (263) (263) 30 (233)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Change in UK
tax rate on
deferred
taxation - - - 16 - 16 - 16
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Change in
valuation
of own
shares held
by Employee
Benefit
Trust - - - - 19 19 - 19
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Employee
Benefit
Trust Loss - - - - (18) (18) - (18)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Net
(expense) /
income
recognised
directly in
equity - - - 16 (262) (246) 30 (216)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Profit for
the
financial
period - - - - 162 162 136 298
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Dividend - - - - (30) (30) 1 (29)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Balance at
30 June
2011 3,076 11,881 3,144 600 12,852 31,553 2,766 34,319
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Currency
translation
adjustments - - - - (171) (171) 158 (13)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Reserve
transfer on
disposal of
Land and
freehold
property * - - - (19) 19 - - -
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Deferred tax
transfer on
disposal of
Land and
freehold
property * - - - 5 (5) - - -
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Change in
valuation
of own
shares held
by Employee
Benefit
Trust - - - - (11) (11) - (11)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Employee
Benefit
Trust
Profit - - - - 11 11 - 11
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Net expense
recognised
directly in
equity - - - (14) (157) (171) 158 (13)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Profit for
the
financial
period - - - - 2,247 2,247 304 2,551
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Dividend - - - - (30) (30) (535) (565)
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
Balance at
31 December
2011 3,076 11,881 3,144 586 14,912 33,599 2,693 36,292
------------- ---------- ---------- ---------- ------------- ---------- --------------- ----------- ----------
* Further detail on the disposal of Land and freehold property are disclosed in notes 6 and 9 to the consolidated financial information respectively.
Notes to Financial Information
for the six months ended 31 December 2011
1. General information
The company is a public limited 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. This condensed consolidated half-yearly financial information was approved for issue on 28 February 2012.
These interim financial results do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2011 were approved by the Board of Directors on 17 October 2011 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.
2. Basis of preparation
This condensed unaudited consolidated financial information for the half year ended 31 December 2011 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union (EU).The half year condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 30 June 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU with the exception of the following standards which have been adopted in this half year report:
-- Annual improvements 2010 (Amendments, effective 01 July 2011)
The following standards, amendments to standards and interpretations are effective in the current financial year but have had no material impact on the Group's consolidated financial information:
-- IFRS 1 Amendment on hyperinflation and fixed dates (effective 01 July 2011)
-- IFRS 7 Financial instruments: Disclosures (Amendment, effective 01 July 2011)
-- IAS 24 Related party disclosures (Amendment, effective 01 July 2011)
-- IFRIC 14 Prepayments of a minimum funding requirement (Amendment, effective 01
July 2011)
At the date of authorisation of these financial statements, the following amendment to a standard was in issue but not yet effective and has not been adopted early by the Group:
-- IFRS 1 Amendment on hyperinflation and fixed dates (effective 01 July 2011)
The condensed unaudited consolidated half yearly financial information has been prepared in accordance with IFRS as adopted by the EU, and those parts of the Companies Act 2006 related to reporting under IFRS that the directors expect to be applicable as at 30 June 2012. IFRS are 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 management's best knowledge of the amount, events or actions, actual results ultimately may differ from those estimates.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 June 2011, as described in those annual financial statements.
4. Segmental information
Six months ended Energy,
31 December 2011 Building Civil and environment International
Consolidated Income services transportation and design Structures multi-disciplinary Total
Statement GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP'000
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Revenue - total 3,309 13,550 3,562 6,408 12,642 39,471
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Revenue- internal (119) (748) (369) (1,102) (1,116) (3,454)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Revenue 3,190 12,802 3,193 5,306 11,526 36,017
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
EBITDA pre exceptional
items 131 (121) 90 420 657 1,177
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Depreciation (25) (98) (26) (35) (235) (419)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Amortisation (23) (157) (9) (8) (103) (300)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Operating profit / (loss)
pre exceptional items 83 (376) 55 377 319 458
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Exceptional items (note
6-b
to e) (220) (518) (85) (86) (406) (1,315)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Operating (loss) / profit
post exceptional items
excluding
profit on sale of PPE (137) (894) (30) 291 (87) (857)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Exceptional profit on
sale
of PPE (note 6a) 4,118
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Operating profit post
exceptional
items 3,261
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Net finance costs pre
exceptional
items (194)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Exceptional finance costs
(note 6f) (284)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Profit before taxation 2,783
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Taxation (232)
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Profit attributable to
minority
interests 304
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Profit attributable to
equity
shareholders 2,247
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
*Adjusted operating
profit
/ (loss) 101 (239) 55 377 396 690
-------------------------- ---------- ---------------- ------------- ------------ -------------------- ---------
Six months ended Energy,
31 December 2010 Building Civil and environment International
Consolidated Income services transportation and design Structures multi-disciplinary Total
Statement GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP'000
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Revenue - total 4,294 14,570 3,525 6,252 10,399 39,040
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Revenue - internal (156) (399) (268) (724) (963) (2,510)
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Revenue 4,138 14,171 3,257 5,528 9,436 36,530
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
EBITDA pre exceptional
items 306 186 147 529 216 1,384
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Depreciation (39) (150) (35) (47) (307) (578)
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Amortisation (38) (212) (17) (11) (109) (387)
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Operating profit /
(loss) pre
exceptional items 229 (176) 95 471 (200) 419
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Exceptional items (30) (288) (53) (62) 425 (8)
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Operating profit /
(loss) post
exceptional items 199 (464) 42 409 225 411
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Net finance costs (203)
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Profit before taxation 208
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Taxation (67)
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Profit attributable to
non-controlling
interest (183)
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
Loss attributable to
the owners
of the parent (42)
*Adjusted operating
profit
/ (loss) 247 (16) 95 471 (125) 672
------------------------ ---------- ---------------- ------------- ------------ -------------------- ---------
* Adjusted operating profit is reported after adding back the amortisation charge on acquired intangible assets of GBP232,000 (31 December 2010 : GBP253,000) and the credit for exceptional items of GBP2,803,000 (31 December 2010: GBP8,000 charge) .
5. Taxation
The estimated effective tax rate for the 6 months to 31 December 2011 is 8% (31 December 2010: 32%). The effective rate for the period has decreased due to the availability of tax losses.
6. Exceptional Items
31 December 31 December
2011 2010
GBP'000 GBP'000
-------------------------------- ------------ ------------
Other operating charges
-------------------------------- ------------ ------------
Profit on sale and leaseback
of Land and freehold property (4,118) -
-------------------------------- ------------ ------------
Property provisions and
accruals 604 (184)
-------------------------------- ------------ ------------
Work in progress and trade
receivables provisions 201 (165)
-------------------------------- ------------ ------------
Impairment of PPE - 80
-------------------------------- ------------ ------------
Other restructuring costs 456 277
-------------------------------- ------------ ------------
(2,857) 8
-------------------------------- ------------ ------------
Depreciation
-------------------------------- ------------ ------------
Depreciation of PPE 54 -
-------------------------------- ------------ ------------
Interest payable
-------------------------------- ------------ ------------
Mortgage early repayment 284 -
charge
-------------------------------- ------------ ------------
Total exceptional items (2,519) 8
-------------------------------- ------------ ------------
a) Profit on sale and leaseback of Land and freehold property: On 17 November 2011, the Group disposed of its head office, Pickfords Wharf, through a sale and leaseback agreement. The property was sold for GBP11,914,000. A pre-tax profit of GBP4,118,000 was recognised on the sale, after transaction costs of GBP406,000.
b) Property provisions and accruals: At 31 December 2011, a provision of GBP604,000 was made as an exceptional cost in respect of leasehold charges and dilapidation costs on vacated properties or on onerous lease space. The leasehold charges are primarily made up of rent, rates and service charges payable by the Group over the remaining lease term.
c) Work in progress and trade receivables provisions: At 31 December 2011, a provision of GBP201,000 was made against work in progress and trade receivable balances in Ireland, as a result of the closure of the Irish branch of our Civil and transportation business.
d) Restructuring costs: Relates mainly to redundancy costs resulting from restructuring within our Building services, Civil and transportation and Emirates businesses.
e) Depreciation of PPE: An additional depreciation charge of GBP54,000 relates to the accelerated depreciation on PPE within the vacated office space.
f) Mortgage early repayment charge: As a result of the sale of Pickfords Wharf, the mortgage on the property was repaid in full. An early repayment charge of GBP284,000 was incurred as a result of the repayment.
7. Earnings per share
The basic earnings per share has been calculated on the profit attributable to shareholders and based on the weighted average of 30,552,824 shares in issue during the period and ranking for dividend (31 December 2010: 30,499,157 ).
The fully diluted earnings per share also takes account of unexercised options potentially convertible into new ordinary shares and shares conditionally awarded in accordance with the Long Term Incentive Plan. The calculation is based on a weighted average of 30,552,824 shares during the period (31 December 2010: 30,516, 401).
8. Dividends
The directors propose an interim dividend of 0.1p per share (31 December 2010: 0.1p per share). The shares become ex-dividend on 7 March 2012 and the dividend will be paid on 4 April 2012 to those shareholders on the register at the close of business on 9 March 2012.
The final dividend for the year ended 30 June 2011 was paid on 10 January 2012 to all members on the shareholders register at 9 December 2011.
Unaudited Unaudited
Six months Six months to
to 31 December
31 December 2010
2011 GBP'000 GBP'000
------------------------------------ -------------- ---------------
Dividends charged to shareholders'
equity in the period 30 273
------------------------------------ -------------- ---------------
Dividend per ordinary share paid
in period 0.0p 0.0p
------------------------------------ -------------- ---------------
9. Capital expenditure
PPE and Other PPE and Other
intangible intangible
assets assets
31 December 31 December
2011 2010
GBP'000 GBP'000
---------------------------- -------------- --------------
Opening net book amount at
1 July 11,207 12,536
---------------------------- -------------- --------------
Additions 149 89
---------------------------- -------------- --------------
Disposals (7,410) 13
---------------------------- -------------- --------------
Exchange rate adjustments (19) 78
---------------------------- -------------- --------------
Depreciation, amortisation
and impairment (773) (1,045)
---------------------------- -------------- --------------
Closing net book amount at
31 December 3,154 11,671
---------------------------- -------------- --------------
Disposals during the period include GBP7.39m relating to the sale of Pickfords Wharf (see note 6).
10. Trade and other receivables
As of 31 December 2011, trade receivables, net of provisions were GBP18.8m (31 December 2010: GBP20.0m and 30 June 2011: GBP20.0m) of which GBP10.8m (31 December 2010: GBP13.2m and 30 June 2011: GBP9.1m) 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.
11. Financial liabilities-borrowings
31 December 31 December 30 June
2011 2010 2011
GBP'000 GBP'000 GBP'000
---------------- ------------- ------------ ---------
Current
---------------- ------------- ------------ ---------
Bank loans 408 1,211 1,226
---------------- ------------- ------------ ---------
Finance leases 18 26 39
---------------- ------------- ------------ ---------
426 1,237 1,265
---------------- ------------- ------------ ---------
Non-current
---------------- ------------- ------------ ---------
Bank loans 1,876 9,302 8,733
---------------- ------------- ------------ ---------
Finance leases 28 63 31
---------------- ------------- ------------ ---------
1,904 9,365 8,764
---------------- ------------- ------------ ---------
Total 2,330 10,602 10,029
---------------- ------------- ------------ ---------
At 31 December 2011, the Group has a term loan of GBP2.3m (31 December 2010: GBP6.7m and 30 June 2011: GBP6.2m) which is subject to three financial covenants which are tested half yearly.
Movements in financial liabilities-borrowings are analysed as follows:
31 December 31 December
2011 2010
--------------------------- ------------ ------------
GBP'000 GBP'000
--------------------------- ------------ ------------
Opening amount as at 1
July 10,029 11,283
--------------------------- ------------ ------------
Repayment of borrowing (7,696) (713)
--------------------------- ------------ ------------
Exchange rate adjustments (3) 32
--------------------------- ------------ ------------
Closing amount as at 31
December 2,330 10,602
--------------------------- ------------ ------------
As a result of the sale and leaseback of Pickfords Wharf (see note 6) the Group repaid the GBP3.7m mortgage on the property and GBP3.5m of term loans.
12. Provisions
Liability Property 2011 Liability Property 2010
Insurance provisions Insurance provisions
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
01 July 2,414 233 2,647 2,863 1,392 4,255
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
Charged to the consolidated income statement 380 478 858 289 226 515
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
Utilised (390) (89) (479) (25) (534) (559)
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
Released to the consolidated income statement (199) - (199) (397) (410) (807)
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
Exchange rate adjustments (173) - (173) 45 53 98
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
Discount 16 - 16 (15) - (15)
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
31 December 2,048 622 2,670 2,760 727 3,487
---------------------------------------------- ---------- ----------- -------- ---------- ----------- --------
13. Share capital
The share capital of the company comprises ordinary shares of 10p each. No new shares were issued during the current or comparative period.
Six months ended 31 December
2011 and
Six months ended 31 December Issued and Fully
2010 Paid
-------------------------------- ---------------------
Number
'000 GBP'000
-------------------------------- -------- -----------
At 1 July and at 31 December 30,756 3,076
-------------------------------- -------- -----------
14. Merger reserve
The merger reserve represents the value received in excess of nominal value for shares issued pursuant to business combinations where company law prohibits the recording of a premium. Included within the profit and loss reserve balance brought forward is an amount of GBP1,133,000 (2010: GBP1,133,000) relating to the write off of purchased goodwill prior to the introduction of FRS 10.
15. Notes to the Consolidated Cash Flow Statement
Unaudited Unaudited
Six months Six months
to to
31 December 31 December
2011 2010
GBP'000 GBP'000
----------------------------------------------- ------------- -------------
Profit for the financial period 2,551 141
----------------------------------------------- ------------- -------------
Taxation 232 67
----------------------------------------------- ------------- -------------
Interest payable 528 232
----------------------------------------------- ------------- -------------
Interest receivable (50) (29)
----------------------------------------------- ------------- -------------
Amortisation of other intangible assets 300 387
----------------------------------------------- ------------- -------------
Depreciation 473 578
----------------------------------------------- ------------- -------------
Impairment of PPE - 80
----------------------------------------------- ------------- -------------
Profit on disposal of PPE and other
intangible assets (4,118) (1)
----------------------------------------------- ------------- -------------
Changes in working capital
----------------------------------------------- ------------- -------------
Decrease in Trade and other receivables 1,028 2,033
----------------------------------------------- ------------- -------------
Increase / (decrease) in Trade and
other payables 767 (4,210)
----------------------------------------------- ------------- -------------
Increase / (decrease) in Provisions 122 (1,055)
----------------------------------------------- ------------- -------------
Cash generated from /(used in ) operations 1,833 (1,777)
----------------------------------------------- ------------- -------------
b) Analysis of net funds / (debt)
---------------------------------------------------------------------------------------------
Other
non-cash Exchange
31 December 30 June Cash changes movements 31 December
2010 2011 flow GBP'000 GBP'000 2011
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- --------- --------- ---------- ----------- -------------
Cash balances 1,657 1,411 4,430 - 4 5,845
---------------- ------------- --------- --------- ---------- ----------- -------------
Cash and cash
equivalents 1,657 1,411 4,430 - 4 5,845
---------------- ------------- --------- --------- ---------- ----------- -------------
Current
---------------- ------------- --------- --------- ---------- ----------- -------------
Bank loans (1,211) (1,226) 818 - - (408)
---------------- ------------- --------- --------- ---------- ----------- -------------
Finance leases (26) (39) 23 (5) 3 (18)
---------------- ------------- --------- --------- ---------- ----------- -------------
Non-current
---------------- ------------- --------- --------- ---------- ----------- -------------
Bank loans (9,302) (8,733) 6,857 - - (1,876)
---------------- ------------- --------- --------- ---------- ----------- -------------
Finance leases (63) (31) - 3 - (28)
---------------- ------------- --------- --------- ---------- ----------- -------------
(10,602) (10,029) 7,698 (2) 3 (2,330)
---------------- ------------- --------- --------- ---------- ----------- -------------
Net (debt) /
funds (8,945) (8,618) 12,128 (2) 7 3,515
---------------- ------------- --------- --------- ---------- ----------- -------------
16. Related party transactions
There have been no significant changes in the related party transactions described in the Waterman Group plc financial statements for the year ended 30 June 2011 that could have a material effect on the financial position or performance of Waterman Group plc in the six month period ended 31 December 2011.
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 Interim Management Report. The financial position of the group, its cash flows, liquidity position and borrowing facilities are described in the financial statements and notes.
The directors have prepared a cash flow forecast and a forecast for covenant compliance to June 2013. 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 ensure covenant compliance.
In addition the group has considerable financial resources together with long term contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the directors believe that the group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
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 continue to adopt the going concern basis in preparing the Interim Report and financial statements.
18. Principal risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group remain broadly the same as at 30 June 2011. These risks and uncertainties are expected to be unchanged for the next six months and are disclosed within the Financial Review of the Waterman Group plc Annual Report and Financial Statement 2011.
19. Further information
Copies of the Interim Report are available from the company's registered office at Pickfords Wharf, Clink Street, London SE1 9DG. In addition, electronic copies of the Interim Report and the 30 June 2011 financial statements can be viewed on the Group's website www.watermangroup.com.
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.
Statement of Directors' Responsibilities
The directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the Interim Management Report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.
The directors of Waterman Group plc are listed in the Waterman Group plc Annual Report and Financial Statement 2011. There have been no changes of directors since the Annual Report. A list of current directors is maintained on the Waterman Group website www.watermangroup.com.
By order of the Board
Graham R Hiscocks
Company Secretary
28 February 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
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