(WTM) Waterman Group

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
Unaudited Unaudited Unaudited
Six months to Six months to Six months to
31 December 2009 30 June 2009 31 December 2008
Notes £'000 £'000 £'000
4
Revenue-continuing operations 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

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
5
Taxation (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

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
Unaudited Audited Unaudited
As at As at As at
31 December 2009 30 June 2009 31 December 2008
Notes £'000 £'000 £'000

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

Current liabilities
Trade and other payables (25,950) (31,307) (50,015)
Financial liabilities - 10 (2,791) (4,598) (4,609)

borrowings
Current taxation liability (162) (326) (564)
(28,903) (36,231) (55,188)

Non-current liabilities
Financial liabilities - 10 (10,547) (11,753) (13,341)

borrowings
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
Unaudited Unaudited Unaudited
Six months to Six months to Six months to
31 December 2009 30 June 31 December
£'000 2009 2008
£'000 £'000
Notes

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 1,047 2,296 2,047

activities Cash flows from investing activities
Deferred consideration paid (316) (419) (831)
Purchase of other intangible (19) (96) (258)

assets
Purchase of property, plant (24) (67) (750)

and equipment (PPE)
Proceeds from sale of PPE and 1,573 27 5

other intangible assets
Net cash from / (used in) 1,214 (555) (1,834)

investing activities 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 - (325) (1,107)

equity shareholders

Trustees Limited
Net cash used in financing (893) (1,011) (2,075)

activities
Net increase / (decrease) in 1,368 730 (1,862)

cash, cash equivalents and overdrafts
Effect of exchange rate 291 48 450

changes
1,659 778 (1,412)
Net increase / (decrease) in 14b

cash, cash equivalents and overdrafts

Consolidated Statement of Changes in Shareholders' Equity (unaudited)as at 31 December 2009
Total shareholders'
Share premium Profit and loss equity£'000
Share capital£'000 reserve Merger reserve£'000 Revaluation reserve£'000 Minority Total equity£'000
£'000 reserve£'000 Interest
£'000

Balance at 1 July 2008 2,910 11,832 2,358 1,491 16,250 34,841 1,658 36,499

Currency translation - - - - 1,362 1,362 97 1,459

adjustments
Share based payments charge - - - - 140 140 - 140
Adjustment in respect of Share - - - - (182) (182) - (182)

Incentive Plan
Loss on disposal of own shares - - - - (58) (58) - (58)
Net income recognised directly - - - - 1,262 1,262 97 1,359

in equity
New ordinary shares issued 42 25 431 - - 498 - 498
Profit for the financial - - - - 1,858 1,858 298 2,156

period
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 - - - - (962) (962) 18 (944)

adjustments
Deferred tax charge for the - - - - 20 20 - 20

period
Share based payments credit - - - - (344) (344) - (344)
Adjustment in respect of Share - - - - 151 151 - 151

Incentive Plan
Loss on disposal of own shares - - - - (154) (154) - (154)
Net (expense) / income - - - - (1,289) (1,289) 18 (1,271)

recognised directly in equity
New ordinary shares issued 124 23 355 - - 502 - 502
Profit / (loss) for the - - - - 659 659 (41) 618

financial period
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 - - - - 729 729 380 1,109

adjustments
Reserves transfer on disposal - - - (1,271) 1,271 - - -

of Land and Freehold property
Deferred tax charge for the - - - 356 - 356 - 356

period
Adjustment in respect of Share - - - - (7) (7) - (7)

Incentive Plan
Profit on disposal of own - - - - 7 7 7

shares
Net income recognised directly - - - (915) 2,000 1,085 380 1,465

in equity
Profit for the financial - - - - 198 198 130 328

period
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 Building services Civil and Environmental International
Consolidated Income Statement transportation consultancy Structures multi-disciplinary Total
£ '000 £ '000
£ '000 £ '000 £ '000 £'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 (130)

minority interests
Profit attributable to equity 198

shareholders Six months ended
30 June 2009 Building services Civil and Environmental International
Consolidated Income Statement transportation consultancy Structures multi-disciplinary Total
£ '000 £ '000
£ '000 £ '000 £ '000 £'000
4,725 18,177 4,996 12,705 19,575 60,178

Revenue - total
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
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
Taxation 1,111
Loss attributable to minority 41

interests
Profit attributable to equity 659

shareholders

4. Segmental information (Continued)

Six months ended
31 December 2008 Building services Civil and Environmental International
Consolidated Income Statement transportation consultancy Structures multi-disciplinary Total
£ '000 £ '000
£ '000 £ '000 £ '000 £'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 1,858

shareholders

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 Unaudited Unaudited
Six months to Six months to Six months to
31 December 30 June 2009 31 December 2008
2009£'000 £'000 £'000

Dividends charged to - 325 1,107

shareholders' equity in the period
Dividend per ordinary share 0.0p 1.3p 3.8p

paid in period

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 30 June 2009 31 December 2008
£'000 £'000 £'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
13,338 16,351 17,950

Total

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 (316)

Ltd
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 (15)

Furness Green Ltd 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 - - 65 7

share option schemes Issued as part of the deferred
consideration for the acquisition of - - 348 35

Waterman Boreham Ltd
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 Unaudited Unaudited
Six months to Six months to Six months to
31 December 2009 31 December 2008
£'000 30 June 2009 £'000
£'000

Profit for the financial 328 618 2,156

period
Taxation 128 (1,111) 923
Finance costs payable 391 509 747
Finance income receivable (109) (63) (255)
Amortisation of other 447 476 447

intangible assets
Depreciation 794 861 974
Profit on disposal of PPE and (97) (2) (5)

other intangible assets
Shares granted under the - 116 -

Conditional Share Bonus Award
Share based payments (credit) - (344) 140

/ charge Changes in working capital
Decrease / (increase) 7,058 19,636 (9,402)

in Trade and other receivables
(Decrease) / increase in (6,438) (16,635) 7,319

Trade and other payables
(Decrease) / increase in (787) (1,132) 569

Provisions
Cash generated from operations 1,715 2,929 3,613

b) Analysis of net debt
Other
31 December 30 June Cash flow non-cash changes Exchange movements 31 December 2009
2008 2009 £'000 £'000 £'000
£'000 £'000 £'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 The company news service from the London Stock Exchange

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