Information  X 
Enter a valid email address

Freshwater UK PLC (FWUK)

  Print   

Monday 01 December, 2008

Freshwater UK PLC

Final Results

RNS Number : 2389J
Freshwater UK PLC
01 December 2008
 





Date: 1 December 2008

On behalf of: Freshwater UK PLC ('Freshwater', 'the Company' or 'the Group')

Embargoed until: 0700hrs


Freshwater UK PLC

Preliminary Results for the year ended 31 August 2008


Freshwater UK Plc (AIM: FWUK), the integrated PR and marketing services group with a UK regional network, announces an increase in revenue, profits and dividends for the year to 31 August 2008. 


Highlights



2008

2007

Change

Revenue (gross profit)

£7.51m

£4.66m

+61%

Turnover

£9.52m

£6.54m

+46%

EBITDA+

£1.40m

£1.14m

+23%

Profit before income tax

£1.17m

£0.92m

+27%

Net cash flow from operating activities

£1.00m

£0.81m

+24%

Basic earnings per share++

6.26p

9.66p

-35%

Proposed final dividend per share

1.50p

1.51p

-

Total dividend for the year

3.0p

2.98p

-


 +   Earnings before interest, taxation, depreciation and amortisation

 ++ Mainly due to a full year of dilution following a listing on the Alternative Investment Market in July 2007


Chairman Baroness Cohen of Pimlico said: 


'The results show that we are financially strong, with a substantial positive cash flow from trading. They also highlight the benefits of a large and diverse client base and a high level of revenue visibility.'


Chief Executive Steve Howell said: 


'Thanks to a combination of acquisitions and organic growth, Freshwater has enjoyed its eighth consecutive profitable year resulting in a 61% increase in revenue (gross profit) and a 27% increase in profit before income tax.


'Our robust business model has meant that any shortfalls in the sectors most hit by the economic downturn have been balanced by strong revenues from defensive sectors, such as utilities, healthcare, transport and the public sector.


'We have established ourselves as a leading regional specialist communications consultancy as evidenced by our success since the year end in securing a position on eleven Central Office of Information ('COI') national, regional and specialist PR frameworks following a highly competitive tender process.'


'Trading in the fourth quarter of 2007/8 was strong but overall, the first quarter of 2008/9 will be disappointing as a result of the economic downturn. The Group is restoring margins by taking action to cut costs, and has visibility over 90% of its revenue in the second quarter of the financial year.


'We have also taken steps to streamline our plc overheads by reducing the Board from eight to six people. Chairman Baroness Cohen is to step down at the Group's AGM in February alongside Bart Haines. She will be replaced by existing non-executive director, Marie-Louise Windeler, the former Chief Executive of Hill & Knowlton, one of the industry leaders and part of global marketing giant, WPP.'


'We have a healthy new business pipeline and now have the opportunity to win more public sector work as a result of the COI tender success. The combination of improved efficiency and the new opportunities open to us will enable the Group to deliver a stronger performance through the rest of the year, in a difficult market. 


'The Board believes that we are well placed to compete in this environment as a result of our diverse client base, unique regional-specialist offering and largely regional cost base.


During the year under review the Group acquired and successfully integrated Lynx Public Relations, a Leeds- based utilities sector community relations specialist (1 November 2007), the Waterfront Partnership, a London and Brussels-based public affairs agency, the Waterfront Conference Company (2 December 2007) and Merlin Marketing and Public Relations, a Cardiff-based full service agency (1 February 2008).


Enquiries to:


Freshwater UK


Steve Howell, Chief Executive

Haydn EvansFinance Director

Edward CarterExecutive Director

Alex Love, Corporate Affairs Director

07730 307 743

07739 415 566

07770 378 097

07791 200 391 

Charles Stanley Securities (Nominated Adviser)

Mark Taylor / Freddy Crossley


0207 149 6000


Notes to Editors:

 

  • Freshwater UK plc, which was founded in 1997 by Steve Howell, Chief Executive, aims to become one of the top providers of combined regional, national and specialist PR services to major national brands while retaining and developing strong client portfolios in each region and specialism.
  • The Group is an integrated PR group headquartered in Cardiff with staff in nine offices across Britain and specialist expertise in sectors including healthcare, property, retail, technology, transport, utilities and the public sector.
  • In addition to the core PR business, the Group also has three marketing support service divisions: Creative (graphic design, websites and media buying), Academy (training, coaching and consultancy) and Digital (including broadcast quality videos and DVDs, websites, podcasts, video streaming, websites and electronic newsletters).


Financial highlights


  • Turnover increased by 46% to £9.52m (2007: £6.54m)
  • Revenue (gross profit) increased by 61% to £7.51m (2007: £4.66m)
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 23% to £1.40m (2007: £1.14m) 
  • Profit before income tax increased by 27% to £1.17m (2007: £0.92m)
  • Basic earnings per share decreased 35% to 6.26p (2007: 9.66p), mainly due to a full year of dilution following the listing on AIM 
  • Proposed final dividend of 1.5p per share bringing the total for the year to 3p per share (2007: 2.98p) 
  • Net cash flow from operating activities increased 24% to £1.00m (2007: £0.81m)


Operational highlights


  • Achieved like-for-like organic growth of 8.6% in the financial year in PR businesses in the Group on 1 September 2006 and 31 August 2008
  • Acquired and integrated Lynx Public Relations, a Leeds-based utilities sector community relations specialist, on 1 November 2007
  • Acquired and integrated the Waterfront Partnership, a London and Brussels-based public affairs agency, and the Waterfront Conference Company on 2 December 2007
  • Acquired and integrated Merlin Marketing and Public Relations, a Cardiff-based full service agency, on 1 February 2008
  • Provided services to 434 clients across the UK (2007: 329) with only one - National Grid (9.4%) - accounting for more than 3% of revenue
  • Rebranded Attenborough Saffron, acquired in February 2007, as Freshwater Consumer and moved Freshwater Healthcare and Freshwater Academy staff into its offices in Holborn, London in January 2008 to secure ongoing cost savings
  • Completed the sale of Freshwater House in Cardiff for £750,000 on 2 June 2008 to generate a profit of £0.13m
  • Integrated Cardiff based Freshwater and Merlin staff at new leased offices on 12 May 2008 to deliver ongoing cost savings 
  • Appointed Marie-Louise Windeler, former Chief Executive of Hill & Knowlton UK (part of WPP Group), as a non-executive director

 

Chairman's Statement


It is a pleasure to present to shareholders the annual report and accounts for Freshwater's first full year as an AIM-listed group.  


The results show that we are financially strong, with a substantial positive cash flow from trading. They also highlight the benefits of a large and diverse client base and a high level of revenue visibility. 


We believe our broad spread of sectoral, specialist and regional expertise will provide scope for organic growth and opportunities to make rapid synergistic gains from selective acquisitions, even in tough economic conditions.


Results

  

I am delighted to say that Freshwater has, as an AIM-listed group, continued to deliver the growth it achieved as a private group. The financial results for the year ended 31 August 2008 show profit before income tax growing 27% to £1.17m (2007: £0.92m) on a turnover increase of 46% to £9.52m (2007: £6.54m)


This is a very strong performance, especially considering that, as previously reported at the time of our interim results, the Group suffered an exceptional bad debt of £0.16m due to one of its long-standing property clients going unexpectedly into administration as the impact of the credit crunch began to be felt. This loss arose despite active monitoring of the account at the time, and it led to a further substantial tightening of credit control procedures across the Group.


We achieved strong cash generation, with net cash flow from operating activities increasing 24% to £1.00m (2007: £0.81m). The Group has also reduced long-term borrowings substantially to £0.69m (2007: £1.3m), while short-term borrowings have remained almost constant at £0.35m. Set against £1.08m in cash and cash equivalents at the year end, this means the Group had a positive net cash position.


Strategy


Freshwater's strategy is to build, through selected acquisitions and organic growth, a regional-specialist PR and communications group, with complementary marketing services, trading under a single brand.

 

We distinguish ourselves from other PR agencies in the UK by combining a regional network with a wide range of specialisms in a single integrated operation. This approach allows us to create 'best teams' with the blend of expertise needed by our clients either nationally or regionally, or both.


Freshwater's competitive advantage is reinforced by the opportunities for cross-selling that come from a 400-plus client roster and the relatively low overheads of having our head office and the majority of our staff based outside London.


The Group now has many of the building blocks of its strategy in place. We have offices in most of the UK's regions and our specialist expertise covers, to some degree, all the major PR disciplines. However, we intend to continue to enhance our competitive position by strengthening our regional network and developing greater capacity in some of our specialisms.


In the foreseeable future, given the tougher economic climate, we will focus on doing this through smaller, earnings-enhancing acquisitions and leveraging organic growth from the broader base and higher profile we now have.  


Dividend


The Board is proposing a final dividend of 1.5p taking the total to 3.0p for the year (2007: 2.98p). We have maintained the dividend to reflect the Board's confidence in Freshwater's trading prospects and strong cash position. The dividend is covered twice by earnings and will be paid on 14 January 2009 to shareholders on the register on 12 December 2008. 


Board and Employees


In light of the toughening economic climate, the Group has been taking steps for some time to reduce its cost base and improve efficiency.  


We have been proactive in managing employment costs, mainly by controlling recruitment, with the result that by March 2009 we will have reduced staff numbers by 22% to 106 (compared with 136 in February 2008).


We also intend to reduce the size of our Board from 8 to 6 to ensure plc overheads are consistent with the aim of delivering high margins and shareholder value. To that end, Bart Haines and I will be stepping down at the Annual General Meeting on 12 February 2009.  


Marie-Louise Windeler, an existing non-executive director and Chair of the Audit committee, will step up to replace me as Chairman. Marie-Louise joined the Board on 11 December 2007 and has contributed considerable insight from her high level experience in major PR consultancies, most recently as Chief Executive of Hill & Knowlton UK, a post she held for six years.


In the new economic situation, where acquisitions will be financed mainly by operational cash flows and bank funding - rather than the equity markets - and where the Group's organic growth potential has increased, I have decided to make way for a Chairman who will bring a wealth of industry knowledge to the Group's drive for operational efficiencies and new business.


Bart has been a non-executive director of Freshwater for five years and made a major contribution to the Group, drawing on the vast corporate experience gained during his time as a senior executive of Dow Corning. We wish Bart well in pursuing his other interests.  


In addition to the change of Chairman, the Group also has a new Company Secretary, Ken Tilley. Ken stood down after six years as a director at our last AGM in January, but we are delighted the Group continues to benefit from his business experience by having appointed him as Company Secretary.


Finally, my thanks to all the staff in our ten offices across the UK for their hard work throughout 2007-08 without which these excellent results could not have been achieved.


While being committed to tight management of costs, the Board recognises that the commitment and creativity of all our teams is the foundation for future growth and will endeavour to protect the talent that we have within the Group.


Baroness Cohen of Pimlico

Chairman

1 December 2008


Chief Executive's Review


Freshwater has enjoyed its eighth consecutive year of profitable growth and firmly established itself as Britain's leading regional-specialist communications consultancy.


The Group is reaping the rewards of a strategy based on a diverse client base and an ability to combine a wide range of sectoral, specialist and regional expertise to suit varied client circumstances.


This robust model has meant that any shortfalls in the sectors most hit by the economic downturn have been balanced by strong revenues from defensive sectors, such as utilities, healthcare, transport and the public sector. Moreover, our focus on stakeholder communications means that our revenue comes from a variety of client budgets, including capital programmes and spending required by regulation in fields such as planning, employment and public sector consultation.

   

In its first full year as an AIM-listed group, the Group achieved a 46% increase in turnover to £9.52m (2007: £6.54m), a 61% increase in revenue (gross profit) to £7.51m (2007: £4.66m) and a 27% increase in profit before income tax to £1.17m (2007: £0.92m).


This growth was delivered by a combination of:


  • Like-for-like organic growth of 8.6% in the financial year in the PR businesses that were in the Group at the start of the previous financial year (1 September 2006)


  • A full-year's trading from Attenborough Saffron (now Freshwater Consumer), a London-based consumer agency acquired on 28 February 2007


  • The acquisition of three businesses - Lynx Public Relations (1 November 2007), Waterfront Public Affairs and the Waterfront Conference Company (2 December 2007) and Merlin Marketing and Public Relations (1 February 2008).


As a result of the latest acquisitions and our responsiveness to market trends, Freshwater has been very successful in further diversifying its client base and range of services. In particular, we now have a substantial presence in the utilities and transport sectors, much greater expertise in public affairs and stakeholder communications, and growing revenues in healthcare and technology. We have also, through the acquisition of Merlin, considerably strengthened our digital marketing offering.


While 61% growth in revenue met market expectations, the profit before income tax figure was not as high as anticipated partly due to a bad debt write-off of £0.16m owed by a long standing client in the property sector, which was unexpectedly put into administration in March 2008. This write-off, which was reported at the time of our interim results, was sizeable because of the level of media and print buying undertaken for the client. The Group has now taken additional measures to control credit and is undertaking work with substantial external costs only for clients with the highest credit ratings.


Diverse client base 


Freshwater's client roster grew 32% from 329 in 2006/07 to 434 in 2007/08, with only one - National Grid (9.6 per cent) - accounting for more than 3% of revenue. The top 100 clients, drawn from a diverse range of sectors, accounted for 73% of total revenue. 


The largest sectors by revenue were: consumer and retail - 23% (2007: 29%), public sector - 19% (2007: 27%), transport - 12% (2007: not represented), property and housing - 12% (2007: 15%), professional services - 12% (2007: 12%), utilities - 11% (2007: not represented).


The year saw considerable growth in work for John Lewis. Freshwater handled the PR for store openings in Cambridge, Liverpool and Leicester and the launch of its 2008 Spring Home Collection. We also provided support for John Lewis's nationwide dependability campaign in the summer, and we are now working on the Cardiff store opening in 2009 and a public affairs brief for Wales.  


Freshwater also secured renewed terms with several major clients, including a new four-year contract with the Environment Agency to handle media buying for all its regions and a three-year public affairs contract with the Civil Aviation Authority (CAA).


In addition to the CAA, Waterfront has won more than £0.5m of new business since it joined the Group the benefits of which will be fully realised over the coming months. Wins include major projects for First Group (Hull Trains and Trans-Pennine Express), Invergordon Port Services, Deutsche Bahn, Forth Ports and Mersey Travel. Waterfront, supported by our Cardiff and Bristol offices, is also co-ordinating a client's high profile environmental campaign against the proposed construction of a Severn Barrage.


Freshwater Healthcare was selected, against strong competition, to be on three NHS supplier rosters for the first time - the NHS Blood and Transplant agency, the National Institute for Health and Clinical Excellence and the NHS Institute for Innovation and Improvement.


Even in the troubled property sector, we have been successful in winning substantial new business from Birmingham-based social housing provider Midland Heart and Glasgow-based Mansell Construction.


Freshwater's contractual arrangements with clients vary but the vast majority of the Group's top 100 clients are on some form of retainer or ongoing contract. Our largest client, National Grid, is covered by framework agreements between Lynx and National Grid's electricity transmission, gas transmission and property divisions covering periods up to 2012. 


National Grid has recently announced an increase in its substantial capital expenditure plans, which Lynx supports with stakeholder communication programmes throughout the North of England, some running to 2012. The investments include the development of former gas sites, the construction of the Trans-Pennine Gas Pipeline, extensive cable-laying works in Liverpool, and major infrastructure improvements to facilitate the transmission of renewable power generated in Scotland.

 

Cross selling and combined selling is reflected in the fact that we provided more than one service to 60 of our top 100 clients. 


Since the end of the year, we have been selected for the first time for eleven Central Office of Information ('COI') rosters in a highly competitive pitching process in which hundreds of agencies took part. We are now eligible for selection for Government communications projects in seven English regions, Scotland, Wales and two healthcare specialisms.


Acquisitions


Freshwater completed three acquisitions during the year, all of which have been successfully integrated and are performing well.


Leeds-based Lynx Public Relations, which was acquired on 1 November 2007 and specialises in stakeholder communications in the energy sector, exceeded its one-year earn-out target and is now preparing to rebrand as Freshwater. As noted above, Lynx has framework agreements with National Grid covering the next three or more years. 

 

London and Brussels-based Waterfront Public Affairs and Waterfront Conference Company, acquired on 2 December 2007, have given Freshwater a substantial presence in transport, planning and regeneration. Waterfront is a UK and EU leader in public affairs and government relations, a specialism for which there is growing demand in a period of economic and political volatility. 


Waterfront's conference business complements the public affairs offering by organising policy events in the same sectors. Many of its conferences are funded by third party contracts with clients such as NED Railways, Motability, Grant Thornton, BAA, International Sea Pilots Association and the National Business Travel Network.


Finally, the acquisition of Cardiff-based Merlin on 1 February 2008 enhanced Freshwater's position as the leading Welsh PR agency and expanded our capabilities in interactive media, graphic design, video-DVD production, event management and marketing consultancy.  


All three acquisitions have opened up new avenues for cross and combined selling, as illustrated by the way Waterfront's offering is enhanced by having the support of two regional offices in conveying a client's concerns about the proposed Severn Barrage.


Operations


The Group has devoted considerable attention to integrating all its acquisitions to achieve ongoing efficiency gains, not least through the better use of staff and office resources.


Following the Merlin acquisition in February 2008, the Group employed a total of 136 people. However, mainly by not filling posts and introducing greater flexibility, we reduced staff numbers by 12.5% by the end of the financial year. This, combined with healthy trading, led to an 8% increase in revenue per head (FTE) and a 51% increase in EBITDA per FTE in the second half.  


Despite this, the full year revenue and EBITDA per FTE figures were lower than the previous year at £68,948 (2007: £70,963) and £13,083 (2007: £17,443). We have now introduced a programme for improving efficiency in 2008/09, building on the higher run rate of the second half, through even tighter management of staff utilisation, employment costs and board overheads. The steps we are taking are anticipated to reduce the Group's headcount by a further 10%.


We have also implemented a strategy to improve efficiency in the use of premises. As a result of a review of our properties, we changed our London and Cardiff office arrangements to deliver substantial ongoing savings. In January 2008, we moved our Healthcare and Academy teams into the Consumer (Attenborough Saffron) offices at Holborn. In June 2008, we sold Freshwater House for £750,000 (net of VAT) after having moved in May 2008 the Cardiff-based staff of Freshwater and recently-acquired Merlin into new 8,000 sq ft leased offices in Raglan House, Cardiff Gate Business Park. The new premises incorporate video-DVD editing and production facilities, a graphic design studio, training and meeting rooms, and a library. 


Freshwater has also achieved the Consultancy Management Standard (CMS) from the Public Relations Consultants Association (PRCA). CMS combines elements of ISO 9000 and Investors in People with criteria specific to public relations consultancy. It is an assurance that Freshwater adheres to strict quality standards for service delivery and a stringent code of professional conduct. The onerous requirements are also a barrier to entry, reflected in the fact that only approximately 5% of all PR agencies are CMS accredited.  


Growth strategy


Freshwater is continuing to implement a strategy of creating an integrated Group, trading under one brand and offering a single point of contact for regional and specialist communications consultancy and marketing services.  


No other PR agency combines a regional network with specialist teams in a single operation - an approach that is proving attractive to larger clients needing multi-skilled teams in several locations. 


With more than 400 clients in a diversity of sectors, regions and specialisms, we are in a strong position to meet the challenges of a tough economic climate and continue to be a force for consolidation in a fragmented industry. We are aiming to further increase our share of the UK's PR and communications market, estimated to be worth more than £6bn annually, both organically and through selective acquisitions.  


While our ambitions are tempered by realism about the impact of the current economic uncertainty on our markets and funding options, Freshwater's board believes that a healthy level of profitable growth can still be achieved. The five key elements of our strategy are:


Organic growth of existing operations - With most of the essential building blocks of a strong regional-specialist Group now in place, we have increased our investment in marketing and new business activity. Our focus is on promoting our wide-ranging expertise in 'stakeholder communications', a form of PR that is often a legal requirement and can even be 'counter cyclical' because of the higher demand for crisis communications and public affairs in more turbulent times. 


Cross-selling - Our much-expanded client base means that there are even more opportunities for cross-selling of non-PR services, especially as we now have enhanced capabilities in digital marketing and a dedicated conference business. We have therefore set new targets for sales for Freshwater Academy, Freshwater Creative and the Waterfront Conference Company and introduced schemes to acknowledge and reward success in this area.


New markets - In addition to the new business drive in our core markets, there is also growth potential in new areas, notably the creation of 'direct media' such as web-based TV, social networking sites and contract publishing. To this end, we have forged partnerships with major players in TV production and new technology to pursue substantial contracts to create web-based television channels for a number of potential clients in the healthcare sector.


Profitability - As noted above, we have taken steps to improve profitability in 2008/09 by rationalising our office arrangements in London and Cardiff and managing employment levels very tightly. In addition, we are rationalising some of our divisional structures, exploring further potential cost savings in London (where we have two offices - Holborn and Tooley Street) and maximising the benefits of recently-introduced time management software to increase utilisation and ensure an even closer correlation between time recorded on client work and the invoicing of fees. 


Selective acquisitions - We will continue to consider earnings-enhancing acquisitions that would strengthen our regional network or add to our specialist expertise. Our current thinking is that these will tend to be of a similar size to our ten previous acquisitions. We currently have several opportunities under consideration and believe that deals can be achieved at valuations that sensibly reflect market conditions.


Longer term, we see huge potential for a 'modern communications business' in which PR combines with multi-media expertise and market/audience insight. This would be differentiated from the traditional PR and marketing models and would better fit the emerging opportunities for clients to reach diverse audiences through multiple channels for a variety of goals.


Board


I would like to thank the retiring board members, Baroness Cohen and Bart Haines, for the support they have given me in our first year as an AIM listed group. Baroness Cohen has brought to the Board her vast experience of the City and the equity markets and has a played a key role in advising the Group during this critical period. Bart was one of the earliest private investors and has made a major contribution since becoming a director five years ago. I am sure that Marie-Louise Windeler, in taking over the Chairman's role at the AGM, will help build on what the Group has achieved to date.


Outlook


Trading in the final quarter of 2007/08 was strong, but overall the first quarter of 2008/09 will be disappointing. However, the Group is restoring margins by taking action to cut costs, and has visibility of 90% of its revenue in the second quarter of the financial year. 


We have a healthy new business pipeline and now have the opportunity to win more public sector work as a result of being selected for 11 COI and 3 NHS framework agreements for the first time.


The Directors believe that the combination of improved efficiency and the new opportunities open to us, particularly in the public sector, will enable the Group to deliver a stronger performance through the rest of the year, in a difficult market. 


We also believe that PR will prove less vulnerable to cyclical factors than other marketing and communication disciplines because the explosion of media channels and the volatility of the times have made our core skills of reputation management and content creation more important to our clients than ever. The Board believes that Freshwater is well placed to compete in this environment as a result of our diverse client base, unique regional-specialist offer and largely regional cost base.

Steve Howell 

Chief Executive

1 December 2008


 

 

   UNAUDITED CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 AUGUST 2008

 

 
 
2008
 
2007
 
 
£
 
 
£
 
 
TURNOVER
 
9,523,211
 
6,535,746
 
 
 
 
 
 
REVENUE
 
7,513,794
 
4,655,145
 
Other income
 
126,548
 
-
 
Exceptional administrative expenses
 
(155,807)
 
-
 
Other administrative expenses
 
(6,271,689)
 
 (3,638,030)
OPERATING PROFIT
 
1,212,846
 
1,017,115
 
Finance income
 
96,433
 
38,759
 
Finance costs
 
(140,339)
 
(135,173)
PROFIT BEFORE INCOME TAX
 
1,168,940
 
920,701
 
Income tax expense
 
(422,278)
 
(270,415)
PROFIT FOR THE YEAR
 
746,662
 
650,286
 
 
 
 
 
Earnings per share for profit attributable to the equity holders of the Company during the year
 
 
 
 
 
Basic earnings per share
 
6.26p
 
9.66p
Diluted earnings per share
 
5.79p
 
9.48p
 
 



 


 

UNAUDITED CONSOLIDATED BALANCE SHEET

AS AT 31 AUGUST 2008


 

 
 




2008


2007



£



£


ASSETS










Non-current assets





Property, plant and equipment


872,742


1,011,175

Intangible assets


8,940,984


5,336,122



9,813,726


6,347,297

Current assets





Inventories


215,053


55,434

Trade and other receivables


2,352,520


1,608,987

Derivative financial instruments


-


700

Cash and cash equivalents


1,077,633


3,570,459



3,645,206


5,235,580






Total assets


13,458,932


11,582,877






EQUITY










Issued equity capital


1,256,901


1,115,300

Share premium


6,305,883


5,266,624

Other reserves


635,000


720,000

Retained earnings


1,353,837


970,391



9,551,621


8,072,315






LIABILITIES










Non-current liabilities





Long term borrowings


689,360


1,296,656

Deferred tax liabilities


42,719


38,070



732,079


1,334,726

Current liabilities





Trade and other payables


2,163,563


1,554,624

Derivative financial instruments


30,049


-

Short-term borrowings


350,365


344,597

Current tax liabilities


631,255


276,615



3,175,232


2,175,836






Total liabilities


3,907,311


3,510,562






Total equity and liabilities


13,458,932


11,582,877

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 AUGUST 2008





Ordinary shares


Preferred ordinary shares


Share Premium


Share option 


Other reserves


Retained earnings



£


£


£


£


£


£

31 August 2006 


439,059


130,000


1,607,104


7,753


143,102


490,934

Issue of ordinary shares


64,233


-


491,839


-


-


-

Issue of preferred shares 


-


11,428


88,570


-


-


-

Conversion of preferred shares 


141,428


(141,428)


179,000


-


-


-

Issue of ordinary shares (IPO)


470,580


-


2,900,111


-


-


-

Share option reserve


-


-


-


12,247


-


-

Movement in contingent consideration


-


-


-


-


556,898


-

Profit for the year 


-


-


-


-


-


650,286

Dividends


-


-


-


-


-


(170,829)

31 August 2007 


1,115,300


-


5,266,624


20,000


700,000


970,391

Issue of ordinary shares 


141,601


-


1,039,259


-


-


-

Movement in contingent consideration


-


-


-


-


(85,000)


-

Profit for the year 


-


-


-


-


-


746,662

Dividends


-


-


-


-


-


(363,216)

31 August 2008


1,256,901


-


6,305,883


20,000


615,000


1,353,837




UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 AUGUST 2008





2008


2007



£



£


Operating profit


1,212,846


1,017,115

Depreciation of property, plant and equipment


150,040


99,810

Impairment of goodwill


-


26,470

Amortisation of other intangible assets 


1,821


898

Unrealised loss / (gain) on derivative financial instrument


30,749


(700)

(Profit) / loss on disposal of fixed assets


(108,402)


4,664

Change in inventories


(20,970)


4,626

Change in trade and other receivables


342,644


(76,301)

Change in trade and other payables


(462,484)


18,925

Change in share option reserve


-


12,247



1,146,244


1,107,754

Interest received


96,433


38,759

Interest paid


(140,399)


(135,173)

Income taxes paid 


(107,132)


(199,857)

Net cash flow from operating activities 


995,146


811,483






Net cash flow arising from acquisitions


(2,746,303)


(2,662,624)

Purchase of property plant and equipment


   (497,075)


(171,626)

Disposal of property, plant and equipment  


749,195


-

Net cash flow from investing activities


(2,494,183)


(2,834,250)






Proceeds from the issue of share capital


-


3,802,309

Change in borrowings


 (630,573)


1,112,974

Dividends paid


(363,216)


(170,829)

Net cash flow from financing activities


(993,789)


4,744,454






(Decrease) / increase in cash and cash equivalents


(2,492,826)


2,721,687

Cash and cash equivalents at the start of the period


3,570,459


848,772

Cash and cash equivalent at the end of the period 


1,077,633


3,570,459



1. GENERAL INFORMATION  

 

Freshwater Group ('the Group') comprises Freshwater UK Plc (the 'Company') and its subsidiary undertakings. The Company is a limited liability company incorporated and domiciled in the United Kingdom. The Company's registered number is 4059741 (England and Wales) and its registered office is at Raglan House, Cardiff Gate Business Park, Cardiff, CF23 8RB. This preliminary announcement was approved for issue by the Board of Directors on 1 December 2008.

 

2. FINANCIAL INFORMATION

 

The financial information on pages 8 through 14 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. It is extracted from the Company's draft statutory accounts for the year ended 31 August 2008 and is prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU. The Company's statutory accounts for the year ended 31 August 2008 are currently unaudited and have yet to be delivered to the Registrar of Companies. The Company's statutory accounts for the year ended 31 August 2007 have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.

 

3. AVAILABILITY OF DOCUMENT

 

Copies of this announcement (and the Company's statutory accounts for the year ended 31 August 2008 when available) may be obtained from the Company Secretary, Freshwater UK Plc, Raglan House, Cardiff Gate Business Park, Cardiff, CF23 8RB.

 

4. SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies applied in preparing the financial information were the same as applied in preparing the Company's statutory accounts for the year ended 31 August 2007 in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU with the exception of the adoption of IFRS 7 - Financial Instruments: Disclosures and the Amendment to IAS 1 - Presentation of Financial Instruments (Capital Disclosures). Adoption did not impact the Group's reported profit or equity. 

 

5. PROFIT BEFORE TAX

 

Profit before tax is stated after charging the following:






2008


2007





£



£




Depreciation of property, plant and equipment:


150,040


99,810



Impairment of goodwill


-


  26,470



Amortisation of other intangible assets


1,821


898



Amounts payable under operating leases


356,754


194,319



Employee costs 


4,264,564


2,528,189



Unrealised loss / (gain) on derivative contract


30,749


(700)

 

Within depreciation of property, plant and equipment is £10,000 (2007: £15,754) relating to assets held under finance leases. Amounts payable under operating lease relate primarily to leases entered into in order to occupy office premises.

 

6. SHARE CAPITAL 






Authorised

Allotted, called up and fully paid





Ordinary

Preferred ordinary

Ordinary

Preferred ordinary





No


Par

No


Par

No


Par

No


Par



31 August 2006


2,300,000

20p

700,000

20p

2,195,297

20p

650,000

20p



Authorised / issued


6,950,000


50,000


321,116


57,142




Conversion of preferred shares


750,000


(750,000)


707,142


(707,142)






10,000,000


-


3,223,555


-




June 2007 2:1 split


10,000,000


-


3,223,555


-






20,000,000

10p

-


6,447,110

10p

-




July 2007 Initial Public Offering


-


-


4,705,891


-




31 August 2007 


20,000,000

10p

-


11,153,001

10p

-




Authorised / issued


-


-


1,416,013


-




31 August 2008 


20,000,000

10p

-


 12,569,014

10p

-


 

Changes since 31 August 2007

 

In September 2007 1,000 ordinary shares were issued to Mr Johnny Chau following the exercise of a share option. 

 

In November 2007 109,890 ordinary shares were issued to the vendors of Lynx Public Relations Limited at a deemed issue price of 91p each. 

 

In December 2007 30,110 ordinary shares were issued to the vendors of the Waterfront Conference Company Limited at a deemed issue price of 83p each

 

In December 2007 240,876 ordinary shares were issued to the vendors of the business of the Waterfront Partnership at a deemed issue price of 83p each. 

 

In February 2008 234,137 ordinary shares were issued to the vendors of Merlin Marketing and Public Relations Limited at a deemed issue price of 85p each

 

In March 2008 800,000 ordinary shares were issued to the vendors of Freshwater Consumer Limited (formerly Attenborough Saffron Limited) at a deemed issue price of 87.5p each

 

Changes since 31 August 2008 

 

In November 2008 489,796 ordinary shares were issued to the vendors of Lynx Public Relations Limited at a deemed issue price of 49p each.

 

7. DIVIDENDS






£




Paid during the year ended 31 August 2007:





Final 2005/06 ordinary dividend at 2.8p (1.4p) per qualifying share


79,269



Interim 2006/07 ordinary dividend at 2.931p (1.4655p) per qualifying share


91,560





170,829








Paid during the year ended 31 August 2008:





Final 2006/07 ordinary dividend at 1.514p per qualifying share


174,680



Interim 2007/08 ordinary dividend at 1.5p per qualifying share


188,536





363,216

 

The figures in brackets illustrate the effects of the 2:1 split that occurred in June 2007 and facilitate a year on year comparison. Details of the proposed final 07/08 dividend are provided in the Chairman's Statement. This will be accounted for as an appropriation of retained earnings when paid and is not reflected in this preliminary announcement.

 

8. EARNINGS PER SHARE

 

Basic earnings per share

 





2008


2007





£ / no.



£ / no.




Profit attributable to ordinary shareholders


746,662


650,286



Weighted average number of ordinary shares


11,926,396


6,732,996










Basic earnings per share 


6.26p


9.66p

 

Diluted earnings per share

 





2008


2007





£ / no.



£ / no.




Profit attributable to ordinary shareholders (diluted)


746,662


650,286










Weighted average number of ordinary shares


11,926,396


6,732,996



Adjustment - Share options


4,083


34,108



Adjustment - Business combinations - Contingent share consideration 


947,368


91,667



Weighted average number of ordinary shares (diluted) 


12,877,847


6,858,771










Diluted earnings per share 


5.79p


9.48p

 

Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding after adjusting these amounts for the effects of dilutive potential ordinary shares. Contingent share consideration is taken into account from the earlier of the beginning of the period and the date of the related business combination to the extent that the relevant conditions have been met by the balance sheet date and the consideration is dilutive. In calculating diluted earnings per share for the year ended 31 August 2008 the share option contracts entered into by the Company in January 2006, July 2006, July 2007 and June 2008 were considered antidilutive as the exercise price is greater than the current share price.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR BPBPTMMBTBPP

a d v e r t i s e m e n t