A decision to refocus engineering consultant Waterman (WTM) on the UK market is paying dividends.

Adjusted earnings per share (EPS) surged 170% and the dividend is 100% ahead of last year in the 12 months to 30 June 2015.

That’s the second year in a row Waterman has doubled its dividend payment.

Shares in London Bridge-headquartered Waterman are up 8.6% to 79.6p this morning.

[caption id="attachment_58989" align="alignnone" width="475"]Waterman historical price to book value Waterman historical price to book value[/caption]

Waterman withdrew from markets including Russia, China and the Middle East after struggling to collect payment for historical work carried out.

Costs associated with these exits have now been fully incurred, management says, leaving the business focused primarily on the UK where it generates 89% of its revenue.

Operations in Australia and Ireland make up the remainder.

‘I am very pleased to announce that Waterman is performing ahead of its three-year strategy plan which runs to 30 June 2016,’ says chairman Michael Baker.

‘The group is delivering a significant improvement in its financial performance and increased returns to our shareholders.’

Targets included profit-before-tax of £3.3 million and return on capital employed (ROCE) at 20%. In the year just reported, the respective figures were £2.7 million (underlying) and 30.3%.

Earnings in the year ahead are expected to hit 7.8p a share, according to estimates provided by Waterman’s corporate broker N+1 Singer, gaining to 10p a year later.

N+1 analyst James Tetley says this represents a ‘compelling valuation’ in a note out today, saying his view of intrinsic value is closer to 115p a share.

Issue Date: 05 Oct 2015