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Engineer Waterman Group is to increase its dividend to shareholders despite a dip in pre-tax profit, as its confidence in the UK market returns.

In its annual results the firm said it would be increasing the dividend to 0.3p per share in January 2014, up from 0.2p per share in January 2013. It said the move 鈥渞eflected our confidence in the future performance of the group鈥�.

Waterman reported a dip in pre-tax profit to 拢353,000 in the year to 30 June 2013, down from 拢530,000 the previous year.

Pre-tax profit was hit by redundancy costs from closing the firm鈥檚 Chinese operations and restructuring its UK business; office closures and provisions against losses from business in China. These formed the bulk of the company鈥檚 exceptional expenses totalling 拢414,000.

But the firm鈥檚 operating profit, which did not include these costs, remained stable at 拢1.1m.

The group also reported a dip in revenue to 拢66.8m down from 拢68.8m over the period.

Nick Taylor, chief executive of Waterman Group, said the business was 鈥渋s in good shape鈥�. 

He added: 鈥淭he results for the period reflect a historic backdrop of challenging trading conditions but, looking forward, our markets are much more positive.  We have also re-positioned the business successfully and the result is a solid platform from which we are confident that over the next three years we will deliver strong growth.鈥�

He said he was 鈥減articularly enthusiastic鈥� about the prospects for the UK market, which accounts for over 75% of Waterman鈥檚 revenue. 

Taylor said: 鈥淥ur clients, many of whom are the major property developers, are much more confident and are starting a wide range of schemes.  At the same time, we have reinforced our footprint and I am delighted that we are increasing our market share. 

鈥淎s a result, our order book is strong with some first class projects, including the 1m sqft new UK headquarters for Google UK Ltd at King鈥檚 Cross.鈥�

The upturn of large London residential and commercial developments was a significant factor in the increased revenue in Waterman鈥檚 structural engineering arm, which reported revenue of 拢12m in 2013, up from 拢11m in 2012. But the structural arms operating margin fell to 9.1%, down from 10.5% over the period.

Waterman鈥檚 building services business reported an increase in activity across all regions and a diverse range of sectors including commercial, hotels, leisure and retail. Although it reported a dip in revenue to 拢5.4m from 拢5.9m over the period, operating margin increased to 3.9% from 1%.

The group鈥檚 most improved business was its energy, environment and design arm, which reported increased revenue of 拢7m in 2013 up from 拢6m in 2012 and a jump in operating margin to 6.8% from 3.4%. It said a diversification and the business into waste permit work and planning was a driver of growth.

But its international business slumped to an operating loss of 拢326,000 in 2013 from an opperating profit of 拢99,000 in 2012. It said this was partly because work in the Australian healthcare, judicial and education sectors - where Waterman gets a significant portion of its workload 鈥� was delayed because of government elections in September 2013. Plus, it said the ongoing Eurozone crisis dampened demand in its European markets.

While its civil and transportation business reported deepening operating losses of 拢303,000 in 2013 compared to 拢232,000 in 2012. Waterman said regional markets, where a lot of its civil engineering capability was, remained tough.