Half Yearly Report

RNS Number : 4418H

Waterman Group PLC

22 February 2010

 

WATERMAN GROUP PLC

Interim Results Announcement for the Six Months to 31 December 2009

 

Waterman Group plc, the international engineering and environmental consultancy, today announces its interim results for the six months to 31 December 2009.

 

Financial Highlights	H1: FY10	H2: FY09	H1: FY09
·; Revenue	£42.9m	£51.3m	£71.1m
·; Earnings before interest, tax, depreciation and amortisation	£2.0m	£1.3m	£5.0m
·; Profit before tax and amortisation of acquired intangible assets	£0.7m	(£0.2m)	£3.3m
·; Amortisation of acquired intangible assets	(£0.2m)	(£0.3m)	(£0.2m)
·; Profit before tax	£0.5m	(£0.5m)	£3.1m
·; Net debt	£7.7m	£10.2m	£12.4m
·; Net asset value per share	131p	126p	133p
·; Interim/final dividend per share	0.9p	0.9p	1.3p

 

Note

The results for the second half of the previous financial year have been included above to enable comparisons to be made with the interim results for the current year.

 

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

 

" We have continued to experience a very challenging backdrop to these results. The property sector which historically provides over 75% of the Group's turnover has remained depressed by the downturn in the economy. Trading conditions have been flat during the last six months albeit at a consistent monthly level."

 

" The management team has been resolute in managing the business. We have maintained effective working capital management and cash generation. Our net debt has been reduced by £2.5m (25%) to £7.7m since June 2009."

 

" Looking forward, during the next twelve months trading conditions are expected to remain difficult and any improvements will be dependent on the speed of recovery of property markets and investment opportunities. One third of Waterman's revenue comes from overseas projects and the company is well placed with a first class range of clients. I am confident that when the property sector starts to recover, then we will see a return to growth."

 

-ends-

Date: 22 February 2010

 

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

 

In the six months to December 2009, Waterman Group achieved a revenue of £42.9m (2008: £71.1m). Adjusted pre tax profit stands at £0.7m (2008: £3.3m) with pre tax profit of £0.5m (2008: £3.1m). The adjusted pre tax profit includes £0.2m (2008: £0.2m) for amortisation of acquired intangible assets.

 

The revenue and profit achieved have been at the lower end of the board's expectations. Projects associated with property development historically provide over 75% of the company's fee income and the slowdown in this sector in 2009 and lack of recovery to date has impacted on the Group's performance.

 

The Group has continued to make cash management a priority. Net debt has reduced to £7.7m from £10.2m at 30 June 2009. The net asset value is 131 pence per share.

 

 

Group Activities - UK

 

Waterman operates within the UK in four segmental profit centres based on the following engineering disciplines:-

 

Civils

Structures

Building Services

Environmental

 

Each engineering discipline works in a range of sectors in both the private and public markets. Professional advice and designs provided by the Group range from planning consultancy such as environmental impact assessments and transportation studies through to detailed design and facilities management of completed projects.

 

Historically, over 70% of Waterman's UK revenue would be from projects in the private property sector such as commercial, retail, residential, industrial and town centre redevelopments. However, during 2009 there has been a significant reduction in projects proceeding, either through planning or to construction. During the second half of 2009 our UK revenue has reduced by 20% compared to the first six months of the year. The private property sector has provided 45% of the UK revenue. The lack of availability of new projects has resulted in greater competition and lower fee levels. Where possible, we have reduced our overheads and costs to re-align the business with the prevailing market conditions. In addition, we have diversified from our core private property markets and have gained an increasing workload in the public sector transportation, energy and utilities sectors. These assignments are in areas which we believe will not suffer from future cuts to spending.

 

In Scotland, we have been appointed by Scottish and Southern Energy as part of a framework to provide design advice on the upgrade of Scotland's electricity grid network which includes the new Beauly to Denny overhead line works which were approved by the Scottish government in January 2010. This commission is in addition to previous appointments from Scottish and Southern Energy and Scottish Power for the design of four new substations.

 

At the end of 2009, Waterman was appointed by Transport for London (TfL) for a four year consultancy framework for the provision of civil, structural, mechanical and electrical engineering services and project management services specifically for Railway Engineering Assets, such as stations and depots. The framework agreement covers the members of the TfL Group, including London Underground areas BCV (Bakerloo, Central & Victoria lines) and Sub Surface Lines including District, Circle and Hammersmith & City, together with the Network Rail stations under the jurisdiction of London Overground Rail Operations Ltd. The agreement also allows engagement with The Greater London Authority, Metropolitan Police Services and the London Boroughs.

 

Our civil engineering outsourcing company has continued to supply engineers into the public sector on secondment and has experienced consistent demand for its services. In the last six months, we have secured new contracts to provide traffic signal expertise to TfL, and highways and transportation support to Derby City Council. Our long standing term commission to supply bridge engineers to the Highways Agency at their offices throughout the UK has been extended and we have further agreements in place to supply highways maintenance engineers on new long term contracts in the Midlands and South Yorkshire.

 

Work has continued on the early development scheme design for the implementation of Active Traffic Management for the M62 between junctions 18 and 20 for the Highways Agency. Waterman has provided transportation planning advice on the Energy from Waste and Materials Recovery Facility at Rookery South Pit in Bedfordshire for Covanta Energy. The proposed facility is anticipated to produce enough green electricity to power approximately 82,500 homes.

 

Our environmental businesses have continued to experience very challenging trading conditions during 2009 as planning work, environmental impact assessments and due diligence associated with site and building acquisitions have remained at a depressed level during the year. Key due diligence projects recently completed include advising a consortium of Frogmore and Dorchester Group in the acquisition of the former RAF base at Upper Heyford, Oxfordshire and Blackstone Group's acquisition of a 50% stake in London's Broadgate Estate.

 

We have provided sustainability and environmental impact assessments on developments at Albert Embankment; London for Native Land, Nine Elms; London masterplan for Ballymore Group; Crown Wharf at Canning Town for Moonberry Properties and the O2 hotel site at Greenwich Peninsula for AEG/Ansco Hotels. In the waste sector, our team continue to work for major waste contractors on secured work for the Nottingham and Sheffield integrated waste PFI projects together with appraising new technologies suitable to meet current economic and legislative constraints.

 

The Group's structures and building services companies primarily provide advice on the design of buildings. During 2009, revenue reduced significantly as new private sector development was curtailed, however revenue was secured in the lower margin education and healthcare sectors where we have generally been working for contractors as part of their design teams. We are currently designing schools on the Lancashire, Middlesbrough, Birmingham, Hertfordshire and Ealing Building Schools for the Future programmes.

 

Work is progressing on site on Quadrant 3 in Regent Street, London which is a 40,000m2 mixed use development for The Crown Estate and also the new Ordnance Survey headquarters in Southampton. We have been encouraged by the recent activity in the London commercial and financial sectors. To accommodate Nomura at Watermark Place, a 49,000m2 building previously designed by Waterman, we have been appointed to design alterations to the building services and structural frame. In addition, we are providing building services advice to Macquarie Group on their new 20,000m2 London headquarters building at Ropemaker Place, EC2. The level of enquiries for new developments have been increasing and we have recently won commissions for planning and scheme design for three new buildings in EC2, London with a total development area of over 45,000m2.

 

Group Activities - Overseas

 

Waterman generates 34% of the Group's total revenue from overseas operations and a great proportion of the fee income is related to private property developments. The downturn in the economy has delayed and in many cases prevented developments moving forward. Our overseas revenue in the first half of the current financial year is 9% lower than in the second half of the previous financial year.

 

In Europe, the Group's offices in Poland, Belgium, Ireland, Russia and Kazakhstan have been involved in a range of projects at the planning stages and should the economy improve and tenant demand return, several of the developments could proceed to detailed design and construction.

 

Waterman has offices in Abu Dhabi and Dubai and from these locations are working for Middle East clients in the UAE, Qatar, Syria and Sudan. The structural work on site is nearing completion on the 450,000m2 Al Muneera retail and residential development in Abu Dhabi on which Waterman is lead consultant providing building services, structures and civil engineering designs. In November 2009, the Crowne Plaza and Staybridge hotels were completed for the Abu Dhabi Formula 1 race on Yas Island. Waterman's appointment to provide facility management advice to Abu Dhabi Motorsports Management has been extended following the successful opening of the race circuit.

 

In Australia, Waterman's offices in Melbourne, Sydney and Brisbane have been particularly busy with projects in the healthcare and residential sectors. We have recently been appointed for the design of five new and refurbished police stations in New South Wales. In Melbourne, work is progressing well on site on the AU$1.0bn Royal Children's Hospital and we are also currently involved in the preparation of the technical brief on behalf of the State Government of Victoria for the new AU$ 1bn world class comprehensive cancer centre to be built in Parkville, Melbourne.

 

Resources

 

Our utilisation rates have been lower than expected during the first half of the financial year and we have continued to review the alignment of our resources with our anticipated future workload. This has resulted in some further staff reductions, with a one off charge of £0.25m being absorbed within our declared profit for the period.

 

Change in ownership of Waterman Emirates Pty Ltd

 

On 3 November 2009, Waterman Group became owner of 100% of the share capital of Waterman Emirates Pty Ltd. Previously, 20% of the share capital of Waterman Emirates Pty Ltd was held indirectly by a minority shareholder.

 

Waterman Emirates Pty Ltd conducts business for Waterman Group in the Middle East. In November 2009, we were selected by MAF Properties based in Dubai to provide civil and structural engineering advice on a 115,000m2 retail project which is phase 1 of a mixed use development in Sabboura, Syria.

 

Property

 

On 24 November 2009, Waterman Group completed the sale of a 580m2 freehold office property in Southwark, London for £1.57m. The property was revalued in 2004 upon the introduction of IFRS and a small profit has been recognised over its IFRS book value.

 

We have continued with our strategy for rationalisation of our office accommodation in the UK and Ireland where, as a result of acquisitions, we have had more than one office in the same city. Generally, the consolidation has occurred as leases expire or break clauses arise on currently occupied premises.

 

Board of Directors

 

The roles of the Finance Director and Company Secretary have been reviewed to meet the requirements of the Group's strategy for international diversification and the increase in corporate governance both in the UK and overseas.

 

On 19 February 2010, Alex Steele was appointed as Finance Director and joins the Board with immediate effect. Graham Hiscocks will continue with his role as director with responsibility for Corporate Governance and as Company Secretary.

 

Alex Steele joined Waterman Group in March 2008 as Group Divisional Director of Finance and has worked closely with Graham Hiscocks as part of a planned strategy for separating the roles of Finance Director and Company Secretary. Alex is a qualified chartered accountant and she previously worked for PricewaterhouseCoopers in the UK and in Australia.

 

Dividend

 

The basic earnings per share are 0.6p (2008: 6.3p) and the adjusted earnings per share are 1.2p (2008: 6.9p).

 

The total dividend for the financial year ended June 2009 was 2.2p per share which included a final dividend of 0.9p per share. In view of the current prevailing trading conditions, the Board has decided to declare an interim dividend of 0.9p per share payable on 31 March 2010 to shareholders on the register on 5 March 2010.

 

Outlook

-

A significant proportion of Waterman Group's turnover and profit is generated from the property sector and the markets in which the Group operates have been depressed by the lack of demand resulting from the global recession. Whilst we do not anticipate any significant recovery over the next six months, we remain confident that the demand for our services will increase as clients commit to property development schemes in the future.

 

We are continuing to target energy and power related work and it is anticipated that further revenue will be generated during 2010 in this growing market.

 

The public sector in the UK provides 36% of the Group's fee income with our main markets in highways, education, healthcare and rail. We are not immune from any public sector spending cuts, however the Board expects that the impact on the Group will be limited in this financial year.

 

The Board remains focused on delivering a high quality service on a global basis. Waterman has an excellent reputation and a first class range of clients. Our experienced management team and track record provides the confidence that the Group will make solid progress as market conditions improve.

 

 

 

Roger Fidgen

Chairman

22 February 2010

 

 

 

 

 

Consolidated Income Statement for the six months ended 31 December 2009
			Notes	Unaudited Six months to 31 December 2009 £'000		Unaudited Six months to  30 June 2009 £'000		Unaudited Six months to 31 December 2008 £'000
Revenue-continuing operations			4	42,923		51,261		71,140
Employee benefits expense				(26,608)		(30,469)		(42,018)
Other operating charges				(14,336)		(19,502)		(24,130)
Operating expenses				(40,944)		(49,971)		(66,148)
Earnings before interest, taxes, depreciation and amortisation (EBITDA)				1,979		1,290		4,992
Depreciation of property, plant and equipment				(794)		(861)		(974)
Amortisation of other intangible assets				(447)		(476)		(447)
Operating profit/ (loss)			4	738		(47)		3,571
Finance costs				(391)		(509)		(747)
Finance income				109		63		255
Profit / (loss) before taxation				456		(493)		3,079
Taxation			5	(128)		1,111		(923)
Profit for the financial period from continuing operations				328		618		2,156
Profit attributable to - Equity shareholders				198		659		1,858
Profit / (loss) attributable to - Minority interests				130		(41)		298
				328		618		2,156
Basic earnings per share			6	0.6p		2.3p		6.3p
Diluted earnings per share			6	0.6p		2.3p		6.2p
Dividend paid per share			7	0.0p		1.3p		3.8p
Dividend proposed per share			7	0.9p		0.9p		1.3p
Consolidated Statement of Comprehensive Income for the six months ended 31 December 2009
Profit for the year				328		618		2,156
Other comprehensive income / (expense):
Currency translation adjustments				1,109		(944)		1,459
Deferred taxation charge				356		20		-
Share based payments (credit) / charge				-		(344)		140
Adjustment in respect of Share Incentive Plan				(7)		151		(182)
Profit / (loss) on disposal of own shares				7		(154)		(58)
Other comprehensive income / (expense) for the period (net of tax):				1,465		(1,271)		1,359
Total comprehensive income / (expense) for the period				1,793		(653)		3,515
Total comprehensive income attributable to Equity shareholders				1,283		(630)		3,120
Total comprehensive income / (expense) attributable to Minority interests				510		(23)		395
Consolidated Balance Sheet as at 31 December 2009
	Notes	Unaudited As at 31 December 2009 £'000			Audited As at 30 June 2009 £'000		Unaudited As at  31 December 2008 £'000
ASSETS
Non-current assets
Goodwill		17,805			17,290		17,187
Other intangible assets	8	2,065			2,458		2,827
Property, plant and equipment	8	11,754			13,901		14,886
Loan and receivables		10			10		10
Deferred taxation asset		314			390		363
		31,948			34,049		35,273
Current assets
Trade and other receivables	9	45,216			50,987		73,813
Cash and cash equivalents		5,619			6,158		5,516
		50,835			57,145		79,329
Total assets		82,783			91,194		114,602
LIABILITIES
Current liabilities
Trade and other payables		(25,950)			(31,307)		(50,015)
Financial liabilities - borrowings	10	(2,791)			(4,598)		(4,609)
Current taxation liability		(162)			(326)		(564)
		(28,903)			(36,231)		(55,188)
Non-current liabilities
Financial liabilities - borrowings	10	(10,547)			(11,753)		(13,341)
Provisions	11	(3,014)			(3,801)		(4,923)
Deferred taxation liability		(145)			(781)		(1,994)
		(13,706)			(16,335)		(20,258)
Total liabilities		(42,609)			(52,566)		(75,446)
Net assets		40,174			38,628		39,156
SHAREHOLDERS' EQUITY
Share capital	12	3,076			3,076		2,952
Share premium reserve		11,880			11,880		11,857
Merger reserve	13	3,144			3,144		2,789
Revaluation reserve		576			1,491		1,491
Profit and loss reserve		19,506			17,308		18,263
Total shareholders' equity		38,182			36,899		37,352
Minority interest		1,992			1,729		1,804
Total equity		40,174			38,628		39,156

 

Consolidated Cash Flow Statement for the six months ended 31 December 2009
	Notes	Unaudited Six months to 31 December 2009 £'000	Unaudited Six months to 30 June 2009 £'000	Unaudited Six months to 31 December  2008 £'000
Cash flows from operating activities
Cash generated from operations	14a	1,715	2,929	3,613
Finance costs paid		(341)	(373)	(630)
Finance income received		109	63	255
Taxation paid		(436)	(323)	(1,191)
Net cash from operating activities		1,047	2,296	2,047
Cash flows from investing activities
Deferred consideration paid		(316)	(419)	(831)
Purchase of other intangible assets		(19)	(96)	(258)
Purchase of property, plant and equipment (PPE)		(24)	(67)	(750)
Proceeds from sale of PPE and other intangible assets		1,573	27	5
Net cash from / (used in) investing activities		1,214	(555)	(1,834)
Cash flows from financing activities
Share issues		-	-	32
Repayment of borrowing		(617)	(620)	(382)
Repayments on finance leases		(29)	(4)	(20)
Equity dividends paid-to equity shareholders		-	(325)	(1,107)
-to minority interests		(247)	(52)	(249)
Purchase of shares by Waterman Trustees Limited		-	(10)	(349)
Net cash used in financing activities		(893)	(1,011)	(2,075)
Net increase / (decrease) in cash, cash equivalents and overdrafts		1,368	730	(1,862)
Effect of exchange rate changes		291	48	450
Net increase / (decrease) in cash, cash equivalents and overdrafts	14b	1,659	778	(1,412)

 

 

Consolidated Statement of Changes in Shareholders' Equity (unaudited) as at 31 December 2009
	Share capital £'000	Share premium reserve £'000	Merger reserve £'000	Revaluation reserve £'000	Profit and loss reserve £'000	Total shareholders' equity £'000	Minority Interest £'000	Total equity £'000
Balance at 1 July 2008	2,910	11,832	2,358	1,491	16,250	34,841	1,658	36,499
Currency translation adjustments	-	-	-	-	1,362	1,362	97	1,459
Share based payments charge	-	-	-	-	140	140	-	140
Adjustment in respect of Share Incentive Plan	-	-	-	-	(182)	(182)	-	(182)
Loss on disposal of own shares	-	-	-	-	(58)	(58)	-	(58)
Net income recognised directly in equity	-	-	-	-	1,262	1,262	97	1,359
New ordinary shares issued	42	25	431	-	-	498	-	498
Profit for the financial period	-	-	-	-	1,858	1,858	298	2,156
Dividend	-	-	-	-	(1,107)	(1,107)	(249)	(1,356)
Balance at 31 December 2008	2,952	11,857	2,789	1,491	18,263	37,352	1,804	39,156
Currency translation adjustments	-	-	-	-	(962)	(962)	18	(944)
Deferred tax charge for the period	-	-	-	-	20	20	-	20
Share based payments credit	-	-	-	-	(344)	(344)	-	(344)
Adjustment in respect of Share Incentive Plan	-	-	-	-	151	151	-	151
Loss on disposal of own shares	-	-	-	-	(154)	(154)	-	(154)
Net (expense) / income recognised directly in equity	-	-	-	-	(1,289)	(1,289)	18	(1,271)
New ordinary shares issued	124	23	355	-	-	502	-	502
Profit / (loss) for the financial period	-	-	-	-	659	659	(41)	618
Dividend	-	-	-	-	(325)	(325)	(52)	(377)
Balance at 30 June 2009	3,076	11,880	3,144	1,491	17,308	36,899	1,729	38,628
Currency translation adjustments	-	-	-	-	729	729	380	1,109
Reserves transfer on disposal of Land and Freehold property	-	-	-	(1,271)	1,271	-	-	-
Deferred tax charge for the period	-	-	-	356	-	356	-	356
Adjustment in respect of Share Incentive Plan	-	-	-	-	(7)	(7)	-	(7)
Profit on disposal of own shares	-	-	-	-	7	7		7
Net income recognised directly in equity	-	-	-	(915)	2,000	1,085	380	1,465
Profit for the financial period	-	-	-	-	198	198	130	328
Dividend	-	-	-	-	-	-	(247)	(247)
Balance at 31 December 2009	3,076	11,880	3,144	576	19,506	38,182	1,992	40,174

 

Notes to Financial Information

for the six months ended 31 December 2009

 

1. General information

 

The company is a limited liability company incorporated and domiciled in the UK. The address of its registered office is Pickfords Wharf, Clink Street, London SE1 9DG.The company has its listing on the London Stock Exchange.

This condensed consolidated half-yearly financial information was approved for issue on 22 February 2010.

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 2009 were approved by the Board of Directors on 22 October 2009 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 2009 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 2009, 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:

·; IAS 1 (Revised) "Presentation of financial statements"

·; IAS 27 (Revised) "Consolidated and separate financial statements"

·; IFRS 3 (Revised) "Business Combinations"

·; IFRS 8 "Operating Segments".

 

The condensed unaudited consolidated half yearly financial statements have 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 2009. 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 2009, as described in those annual financial statements.

4. Segmental information

 

Six months ended 31 December 2009 Consolidated Income Statement	Building services   £ '000	Civil and transportation   £ '000	Environmental consultancy   £ '000	Structures   £ '000	International  multi-disciplinary £ '000	Total   £'000
Revenue - total	4,130	16,911	3,503	6,139	15,510	46,193
Revenue- internal	(51)	(1,296)	(303)	(833)	(787)	(3,270)
Revenue	4,079	15,615	3,200	5,306	14,723	42,923
EBITDA	193	696	(302)	556	836	1,979
Depreciation	(51)	(218)	(57)	(56)	(412)	(794)
Amortisation	(42)	(245)	(20)	(12)	(128)	(447)
Operating profit / (loss)	100	233	(379)	488	296	738
Net finance costs						(282)
Profit before taxation						456
Taxation						(128)
Profit attributable to minority interests						(130)
Profit attributable to equity shareholders						198
Six months ended 30 June 2009 Consolidated Income Statement	Building services   £ '000	Civil and transportation   £ '000	Environmental consultancy   £ '000	Structures   £ '000	International  multi-disciplinary £ '000	Total   £'000
Revenue - total	4,725	18,177	4,996	12,705	19,575	60,178
Revenue- internal	(120)	(1,080)	(1,887)	(2,449)	(3,381)	(8,917)
Revenue	4,605	17,097	3,109	10,256	16,194	51,261
EBITDA	146	931	(1,290)	2,043	(540)	1,290
Depreciation	(52)	(174)	(67)	(85)	(483)	(861)
Amortisation	(39)	(281)	(20)	(15)	(121)	(476)
Operating profit / (loss)	55	476	(1,377)	1,943	(1,144)	(47)
Net finance costs						(446)
Loss before taxation						(493)
Taxation						1,111
Loss attributable to minority interests						41
Profit attributable to equity shareholders						659

4. Segmental information (Continued)

 

Six months ended 31 December 2008 Consolidated Income Statement	Building services   £ '000	Civil and transportation   £ '000	Environmental consultancy   £ '000	Structures   £ '000	International  multi-disciplinary £ '000	Total   £'000
Revenue - total	7,141	23,665	7,721	12,155	38,003	88,685
Revenue - internal	(410)	(752)	(850)	(1,261)	(14,272)	(17,545)
Revenue	6,731	22,913	6,871	10,894	23,731	71,140
EBITDA	321	2,022	(219)	955	1,913	4,992
Depreciation	(64)	(295)	(63)	(97)	(455)	(974)
Amortisation	(45)	(226)	(22)	(25)	(129)	(447)
Operating profit / (loss)	212	1,501	(304)	833	1,329	3,571
Net finance costs						(492)
Profit before taxation						3,079
Taxation						(923)
Profit attributable to minority interests						(298)
Profit attributable to equity shareholders						1,858

 

 

5. Taxation

 

Taxation for the six months ended 31 December 2009 has been calculated at 28% (31 December 2008: 30% and 30 June 2009: 225%) of the profit before taxation being the estimated effective rate for the year. The effective rate for the period has reduced due to the change in the mix of the profits between the different Group companies and jurisdictions in which they operate. The effective rate at 30 June 2009 reflects the one off write back of deferred tax on unremitted overseas earnings of £1.2m.

 

6. Earnings per share

 

The basic earnings per share has been calculated on the profit attributable to shareholders and based on the weighted average of 30,482,324 shares in issue during the period and ranking for dividend (31 December 2008: 29,475,159 and 30 June 2009: 29,402,826).

 

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 30,482,324 shares during the period (31 December 2008: 29,982,886 and 30 June 2009: 29,846,686).

7. Dividends

 

The directors propose an interim dividend of 0.9p per share (December 2008: 1.3p per share and 30 June 2009: 0.9p). The shares become ex-dividend on 3 March 2010 and the dividend will be paid on 31 March 2010 to those shareholders on the register at the close of business on 5 March 2010.

 

The final dividend for the year ended 30 June 2009 was paid on 12 January 2010 to all members on the shareholders register at 11 December 2009.

 

		Unaudited Six months to 31 December 2009 £'000	Unaudited Six months to 30 June 2009  £'000	Unaudited Six months to 31 December 2008 £'000
Dividends charged to shareholders' equity in the period		-	325	1,107
Dividend per ordinary share paid in period		0.0p	1.3p	3.8p

 

 

8. Capital expenditure

	PPE and Other intangible assets £'000
Six months ended 31 December 2009
Opening net book amount at 1 July 2009	16,359
Additions	43
Disposals	(1,491)
Exchange rate adjustments	149
Depreciation and amortisation	(1,241)
Closing net book amount at 31 December 2009	13,819
Six months ended 31 December 2008
Opening net book amount at 1 July 2008	17,808
Additions	1,008
Disposals	-
Exchange rate adjustments	318
Depreciation and amortisation	(1,421)
Closing net book amount at 31 December 2008	17,713

 

9. Trade and other receivables

 

As of 31 December 2009, trade receivables, net of provisions were £27.3m (30 June 2009:£31.9m) of which £20.1m (30 June 2009: £20.8m) 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.

10. Financial liabilities-borrowings

	31 December 2009 £'000	30 June 2009 £'000	31 December 2008 £'000
Current
Bank loans	1,349	1,141	1,060
Bank overdrafts	-	2,198	2,334
Finance leases	31	52	51
Deferred consideration	1,411	1,207	1,164
	2,791	4,598	4,609
Non-current
Bank loans	10,441	11,249	11,983
Finance leases	106	100	120
Deferred consideration	-	404	1,238
	10,547	11,753	13,341
Total	13,338	16,351	17,950

 

 

Movements in financial liabilities-borrowings are analysed as follows:

	£'000
Six months ended 31 December 2009
Opening amount as at 1 July 2009	16,351
Decrease in bank overdrafts	(2,198)
Repayment of borrowing	(646)
Settlement of part of deferred consideration on AHW (Victoria) Pty Ltd	(316)
Unwinding of discount on deferred consideration	76
Exchange rate adjustments	71
Closing amount as at 31 December 2009	13,338
Six months ended 31 December 2008
Opening amount as at 1 July 2008	18,426
Increase in bank overdrafts	999
Repayment of borrowing	(402)
Settlement of deferred consideration arising on acquisition of Furness Green Ltd	(15)
Settlement of part of deferred consideration on Waterman Boreham Ltd
and AHW (Victoria ) Pty Ltd	(1,283)
Unwinding of discount on deferred consideration	103
Exchange rate adjustments	122
Closing amount as at 31 December 2008	17,950

 

11. Provisions

	Liability insurance provision £'000
Six months ended 31 December 2009
Opening amount as at 1 July 2009	3,801
Charged to the consolidated income statement	943
Utilised	(64)
Released	(1,653)
Discount	(13)
Closing amount as at 31 December 2009	3,014
Six months ended 31 December 2008
Opening amount as at 1 July 2008	4,340
Charged to the consolidated income statement	880
Utilised	(296)
Released	(91)
Unwinding of discount	90
Closing amount as at 31 December 2008	4,923

 

 

12. Share capital

 

The share capital of the company comprises ordinary shares of 10p each. No new shares were issued during the period. In 2008 shares were issued during the comparative period at an issue price ranging from 44.5p to 134.1p and a weighted average share price of 120.7p.

Six months ended 31 December 2009	Authorised		Issued and Fully Paid
	No '000	£'000	No '000	£'000
At 1 July 2009 and at 31 December 2009	41,000	4,100	30,756	3,076

 

Six months ended 31 December 2008	Authorised		Issued and Fully Paid
	No '000	£'000	No '000	£'000
At 1 July 2008	41,000	4,100	29,104	2,910
Issued during the year in respect of share option schemes	-	-	65	7
Issued as part of the deferred consideration for the acquisition of Waterman Boreham Ltd	-	-	348	35
At 31 December 2008	41,000	4,100	29,517	2,952

 

 

13. 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 £1,133,000

(2008: £1,133,000) relating to the write off of purchased goodwill prior to the introduction of FRS 10.

 

 

14. Notes to the Consolidated Cash Flow Statement

 

a) Reconciliation of profit for the financial period to cash generated from operations
	Unaudited Six months to 31 December 2009 £'000	Unaudited Six months to 30 June 2009 £'000	Unaudited Six months to 31 December 2008 £'000
Profit for the financial period	328	618	2,156
Taxation	128	(1,111)	923
Finance costs payable	391	509	747
Finance income receivable	(109)	(63)	(255)
Amortisation of other intangible assets	447	476	447
Depreciation	794	861	974
Profit on disposal of PPE and other intangible assets	(97)	(2)	(5)
Shares granted under the Conditional Share Bonus Award	-	116	-
Share based payments (credit) / charge	-	(344)	140
Changes in working capital
Decrease / (increase) in Trade and other receivables	7,058	19,636	(9,402)
(Decrease) / increase in Trade and other payables	(6,438)	(16,635)	7,319
(Decrease) / increase in Provisions	(787)	(1,132)	569
Cash generated from operations	1,715	2,929	3,613

 

b) Analysis of net debt
	31 December 2008 £'000	30 June 2009 £'000	Cash flow   £'000	Other non-cash changes £'000	Exchange movements £'000	31 December 2009 £'000
Cash balances	5,516	6,158	(830)	-	291	5,619
Bank overdrafts	(2,334)	(2,198)	2,198	-	-	-
Cash and cash equivalents	3,182	3,960	1,368	-	291	5,619
Current
Bank loans	(1,060)	(1,141)	617	(808)	(17)	(1,349)
Finance leases	(51)	(52)	29	(2)	(6)	(31)
Deferred consideration	(1,164)	(1,207)	316	(472)	(48)	(1,411)
Non-current
Bank loans	(11,983)	(11,249)	-	808	-	(10,441)
Finance leases	(120)	(100)	-	(6)	-	(106)
Deferred consideration	(1,238)	(404)	-	404	-	-
Net debt	12,434	(10,193)	2,330	(76)	220	(7,719)

 

 

15. Related party transactions

 

There have been no significant changes apart from the disclosures below in the related party transactions described in the Waterman Group plc financial statements for the year ended 30 June 2009 that could have a material effect on the financial position or performance of Waterman Group plc in the six month period ended 31 December 2009.

On 3 November 2009, Waterman International Limited purchased 100% of the issued share capital of Waterman Emirates Pty Limited from its fellow subsidiary undertaking, Waterman International (Asia) Pty Limited, for the nominal sum of US$100. From this date Waterman Group plc became the owner of 100% of the issued share capital of Waterman Emirates Pty Limited (prior to 3 November 2009: 80%).The impact of this transaction on the total shareholders' equity is not significant.

16. 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 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.

 

17. Principal risks and uncertainties

 

The principal risks and uncertainties affecting the business activities of the Group remain broadly the same as at 30 June 2009. 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 2009.

 

18. Further information

 

Copies of the Interim Report will be sent to shareholders. Additional copies 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 2009 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 2009. On 19 February 2010, Miss Alex Steele was appointed as a director of the Company. There have been no other 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

22 February 2010

 

 

 

This information is provided by RNS

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