JOURNEY CONTINUES
But firm expects stronger second half
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DELAYS IN major international contracts have hit global project management consultancy WYG, which slumped to a half-year loss of £2.8m following a provision of £2.5m for legacy contract claims from discontinued businesses.
The Leeds-based firm said the results were disappointing but it anticipates a stronger second half.
Douglas McCormick, CEO of WYG, said: “Although this is a disappointing set of results, reflecting the issues we highlighted in August and November 2017, there are positives.
“We continue to anticipate a stronger second half, consistent with our historical seasonal trading pattern and our guidance in November. We remain confident that the underlying business is robust and that, supported by a strong order book, we are taking the correct steps to return to a growth trajectory.”
He said revenue is up on the comparative period and the group is seeing major projects start to mobilise, albeit some months later than originally expected.
“My first six months at WYG have been very busy. We have been operationalising the commercial strategy announced in June 2017; extended our bank facility with HSBC and completed a significant step to improve WYG’s position in the light of the potential impact of Brexit,” he said.
“Having met a number of major clients, visited almost all our offices and spoken with several hundred of our highly-skilled staff, I am reassured that WYG is a fundamentally sound business and that we have a strong platform from which to grow in the medium term.”
Revenue for the six months to September 30 rose 4 per cent to £76m. Pre-tax profit, before separately disclosed items, reduced significantly to £1.0m and net debt has increased to £10.1m.
Despite this, the group’s order book, its key lead indicator, increased to its highest level in recent years at £170m as at September 30, up 17 per cent since the end of March.
WYG said it has seen increased activity in almost all areas of its Consultancy Services business albeit at lower levels and margins than it expected at the beginning of the year. The International Development business showed good growth and the group expects an overall improvement in the second half.
Analyst James Tetley at N+1 Singer said: “As trailed in trading updates in August and, more recently, in November, it has been a challenging period for WYG.
“We make no changes to our headline numbers today following recent downgrades, and take reassurance from the strength of the order book, which continues to move on to new highs.
“Legacy issues are still being addressed (a new £2.45m provision taken in the first half relating to discontinued businesses) but the underlying business is robust.
“Self-help measures should gradually restore margins, suggesting significant recovery potential in both earnings and share price.”
We remain confident that the underlying business is robust. Douglas McCormick, chief executive of WYG