RNS Number:9048I
Watermark Group PLC
19 March 2003
Strictly Embargoed until: 07.00 Wednesday 19 March 2003
Another Exceptional Year for Watermark Group plc
Average compound growth rate of 30% per annum over 10 years
Watermark Group plc ("Watermark"), the provider of marketing support services to
the international travel industry, announces final results for the year ended 31
December 2002.
Financial Highlights
Comparing consolidated operations in 2002 with 2001:
* Turnover Up 10% to #35.80m (2001: #32.56m)
* EBITDA Up 30% to #3.37m (2001: #2.59m)
* Operating profit Up 28% to #3.13m (2001: #2.45m)
* Profit (pre-tax) Up 46% to #2.99m (2001: #2.05m)
* Profit (post-tax) Up 41% to #2.15m (2001: #1.53m)
* Dividend per share Up 30% to 1.62p (2001: 1.24p)
* Share owners' funds Up 56% to #7.45m (2001: #4.79m)
* EPS (diluted) Up 43% to 8.76p (2001: 6.14p)
John Caulcutt, Chief Executive of Watermark, commented: "Consistently
outperforming expectations, Watermark has once again achieved a set of record
results. Revenues, profits and earnings per share have yet again reached
all-time highs.
"In terms of operating profits, we have now shown an average compound growth
rate of 30% per annum over the last ten years. The continued growth is despite
the effects of September 11th and the resulting difficulties experienced by
certain airline operators. Indeed, it is the current environment within the
airline industry that presents new and larger opportunities for Watermark, as
airlines revisit their operational cost structures, and increasingly look at the
benefit of outsourcing their requirements for products and services."
For further information please visit www.watermarkplc.com or contact:
John Caulcutt / Crispin Quail John West / Rosie Brown
Watermark Group plc Tavistock Communications
Tel: 01489 897800 Tel: 020 7600 2288
e-mail: info@watermarkplc.co.uk e-mail: jwest@tavistock.co.uk
Chairman's and Chief Executive's letter to share owners
The year in brief
Consistently outperforming expectations, the group has once again achieved a set
of record results. Revenues, profits and earnings per share have yet again
reached all-time highs.
In terms of operating profits, the company has now shown an average compound
growth rate of 30% per annum over the last 10 years. The continued growth is
despite the effects of September 11th, and the resulting difficulties
experienced by certain airline operators, which have been fully "digested" and
are reflected in these latest results. We believe that our figures prove that
our successful business model is based upon the continuing rise in worldwide
passenger numbers (source IATA) and not simply the profitability of our airline
clients, as is often perceived. Indeed it is the current environment within the
airline industry that presents new and larger opportunities for this company, as
airlines revisit their operational cost structures, and increasingly look at the
benefit of outsourcing their requirements for products and services. In our
trading update dated 14 January 2003, we informed share owners that we had now
started to pitch for total supply chain management contracts, which are the
first steps in our (demand led) vision of offering a total "above the wing"
service to airlines.
Financial summary
Comparing consolidated operations in 2002 with 2001:
* Turnover Up 10% to #35.80m (#32.56m)
* EBITDA Up 30% to #3.37m (#2.59m)
* Operating profit Up 28% to #3.13m (#2.45m)
* Profit (pre-tax) Up 46% to #2.99m (#2.05m)
* Profit (post-tax) Up 41% to #2.15m (#1.53m)
* Dividend per share Up 30% to 1.62p (1.24p)
* Share owners' funds Up 56% to #7.45m (#4.79m)
* EPS (diluted) Up 43% to 8.76p (6.14p)
Creating continued value through growth
During the year, the company acquired Globe Audio Limited and Update
International Limited. Both companies have enhanced the range of goods and
services that we supply to the airline and travel sector, as well as increasing
the number of clients with whom we deal. Update has performed in line with our
expectations at the time of acquisition and has given the group access, for the
first time, to the market for meal service equipment. Globe Audio has performed
well above the forecasts made by them at the time of acquisition, and both
companies have contributed to the improvement in gross margins.
Share price
During the year 2002 the company's share price ranged from 116p to 65.5p. At a
share price of 76p, the group stands on an historic price earnings ratio of 8.7.
Dividend policy
The directors appreciate that the importance to the market of dividend yield has
increased significantly. It is therefore proposed that for this year at least,
we increase the cash dividend by 30% (in line with the 10 year average compound
operating profit growth rate) to 1.62p per share (1.24p), giving dividend cover
of 5.4 times.
Personnel
It has been a challenging year for business in general, and the airline sector
in particular. We were therefore the more delighted to receive the KPMG Company
of the Year Award for the best business in Hampshire. Our success in achieving
this award, as well as the results tabled above is, in great part, due to the
dedication and loyalty of our staff; we are grateful for the superlative effort
that has been shown by so many in order to achieve another record year for this
company.
John A-G-Calthorpe John Caulcutt
Chairman Chief executive
Consolidated summarised profit and loss account
For the year ended 31 December 2002
Continuing
Operations Acquisitions Total Total
2002 2002 2002 2001
#'000 #'000 #'000 #'000
Turnover 29,467 6,330 35,797 32,559
Cost of sales (22,807) (4,708) (27,515) (26,564)
____________________________________________
Gross profit 6,660 1,622 8,282 5,995
Other operating expenses (3,996) (1,159) (5,155) (3,541)
(net)
____________________________________________
Operating profit 2,664 463 3,127 2,454
_______________________
Exceptional item - cost of
disposal
of discontinued operation - (187)
Interest receivable 26 30
Interest payable and similar (160) (245)
charges
_________________
Profit on ordinary
activities before taxation 2,993 2,052
Tax on profit on ordinary (842) (518)
activities
_________________
Profit for the financial 2,151 1,534
year
Dividends (397) (553)
_________________
Retained profit for the 1,754 981
year
_________________
Earnings per share
Basic 8.95p 6.37p
Diluted 8.76p 6.14p
Normalised - diluted 9.03p 6.14p
Diluted (adjusted for
underprovision
of taxation in 2001) 9.23p 5.67p
_________________
Consolidated statement of total recognised gains and
losses
Total Total
2002 2001
#'000 #'000
Profit for the financial year 2,151 1,534
Currency translation (282) 22
_________________________
Total recognised gains relating to the year 1,869 1,556
_________________________
Consolidated summarised balance sheet
As at 31 December 2002
2002 2001
#'000 #'000
Fixed assets
Goodwill 1,771 -
Tangible fixed assets 556 309
Investments 337 337
______________________
2,664 646
______________________
Current assets
Stocks 4,533 4,765
Debtors 15,266 6,792
Cash at bank and in hand 4,160 296
______________________
23,959 11,853
Creditors : Amounts falling due within
one year (17,552) (7,714)
______________________
Net current assets 6,407 4,139
______________________
Total assets less current liabilities 9,071 4,785
Creditors : Amounts falling due after more than
one year (1,622) -
_______________________
Total assets 7,449 4,785
_______________________
Capital and reserves
Called-up share capital 242 232
Share premium account 886 678
Shares to be issued 974 -
Capital redemption reserve 24 24
Merger reserve (527) (527)
Profit and loss account 5,850 4,378
_______________________
Equity share owners' funds 7,449 4,785
_______________________
Consolidated summarised cash flow statement
For the year ended 31 December 2002
2002 2001
#'000 #'000
Net cash (outflow) / inflow from
operating activities (990) 1,834
Returns on investments and
servicing of finance (134) (215)
Taxation (881) (320)
Capital expenditure and financial investment (304) (300)
Acquisitions and disposals (1,467) (187)
Equity dividends paid (299) (262)
__________________________
Cash (outflow) / inflow before financing (4,075) 550
Financing 215 32
__________________________
(Decrease) / increase in cash (3,860) 582
__________________________
Reconciliation of operating profit to net cash (outflow) / inflow from operating
activities
Operating profit 3,127 2,454
Depreciation and amortisation charges 244 139
Loss on disposal of investments - 5
Exchange difference on retranslation of foreign
currency net assets (282) 22
Decrease / (increase) in stocks 964 (1,746)
(Increase) / decrease in debtors (7,368) 7,703
Decrease / (increase) in creditors 2,325 (6,743)
_________________________
Net cash (outflow) / inflow from
operating activities (990) 1,834
_________________________
Net cash outflow from acquisitions (527) -
Net cash (outflow) / inflow from continuing (463) 1,834
operations
_________________________
(990) 1,834
_________________________
Analysis and reconciliation of net debt
(Decrease) / increase in cash in the year (3,860) 582
Acquisitions 810 -
Cash flow from movement in hire purchase 3 2
agreements
_________________________
Change in net debt resulting from cash flows (3,047) 584
Inception of finance leases (35) -
Net debt - beginning of year (1,066) (1,650)
_________________________
Net debt - end of year (4,148) (1,066)
_________________________
Notes to the preliminary announcement
For the year ended 31 December 2002
1. Basis of preparation
The preliminary announcement has been prepared in accordance with applicable
accounting standards and under the historical cost convention.
The principal accounting policies of the group have remained unchanged from
those set out in the group's 2001 annual report and financial statements apart
from the adoption of FRS19 - Deferred Tax.
2. Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 31 December 2002 and the summarised profit and
loss account, summarised cash flow statement and associated notes for the year
then ended have been extracted from the group's 2002 statutory financial
statements upon which the auditors' opinion is unqualified.
3. Earnings per share
Basic and diluted earnings per share have been calculated in accordance with FRS
14 - Earnings Per Share. Diluted earnings per share takes into account the
effect of the exercise of employee share options and shares to be issued where
these are expected to dilute earnings.
In order to show results from operating activities on a comparable basis, a
normalised earnings per share has been presented which excludes amortisation
costs from the adjusted earnings calculation following implementation of FRS10 -
Goodwill and Intangible Assets.
An adjusted diluted earnings per share has also been presented which takes into
account an underprovision of taxation in 2001 of #116,000. The calculations of
earnings per share are based on the following profits and numbers of shares:
Earnings Weighted Total 2002 Earnings Weighted Total 2001
average earnings average earnings
shares per share shares per share
#'000 Number (pence) #'000 Number (pence)
Basic earnings 2,151 24,040,859 8.95 1,534 24,054,358 6.37
per share
Add dilutive - 523,724 (0.19) - 928,338 (0.23)
effect of
share
options
_________________________________________________________________________
Diluted 2,151 24,564,583 8.76 1,534 24,982,696 6.14
earnings per
share
_________________________________________________________________________
Add 66 - 0.27 - - -
amortisation
_________________________________________________________________________
Normalised 2,217 24,564,583 9.03 1,534 24,982,696 6.14
earnings per
share
_________________________________________________________________________
Diluted 2,151 24,564,583 8.76 1,534 24,982,696 6.14
earnings per
share
(above)
Add 116 - 0.47 (116) - (0.47)
underprovision
of tax
in 2001
________________________________________________________________________
Adjusted
diluted
earnings
per share 2,267 24,564,583 9.23 1,418 24,982,696 5.67
________________________________________________________________________
4. Dividends
2002 2001
#'000 #'000
Dividend payable 1.62p per share (2001: 1.24p) 393 295
Under / (over) accrual in prior year 4 (25)
Dividend in specie on the disposal of the Event - 283
Management division
_______________________
397 553
_______________________
5. Annual Accounts
The Annual Report and Accounts will be posted to all share owners in April 2003
and will be available at the company's registered office:
Belmore Park
Upham
Hampshire SO32 1HQ
This information is provided by RNS
The company news service from the London Stock Exchange
END
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