Listed consultancy group narrows losses and increases revenues despite ‘another challenging year’
Leeds-headquartered listed consultancy firm WYG has seen revenues rise 1.7% to £157m and pre-tax losses narrow to £4.6m despite “another challenging year”; as it also revealed plans to make £6m savings to improve profitability.
This morning publishing its full-year results to 31 March 2019, WYG said its revenues had risen from £154.4m to £157m and pre-tax losses narrowed from £5.3m to £4.6m. The firm’s results have been published just weeks after a £43m deal to for US business Tetra Tech to acquire the firm was announced.
The firm said it was taking actions to improve profitability and efficiency, including a “range of self-help measures” targeted to generate annual overhead savings in excess of £6m through selective headcount reduction, delayering of management and consolidation of offices. It said its efficiency review was underway, for implementation progressively in FY 19/20 and beyond.
In February, WYG announced it was to revise its market expectations and seek a waiver of the covenant tests in its banking facility agreement.
Douglas McCormick, Chief Executive Officer of WYG , said: “Although this has been another challenging year for WYG, we have taken decisive steps to implement our strategy of delivering a simpler, more robust platform and driving efficiencies which are beginning to take effect. We have won or renewed our place on many key frameworks and secured a number of major new projects which will underpin a significant proportion of our projected earnings for FY20 in both our primary business streams.
“On 20 May 2019, it was announced that the Board had reached agreement on the terms of a recommended cash offer by Tetra Tech to acquire the Company at 55p per share, representing a premium of approximately 244% to the closing share price on 17 May. Becoming part of Tetra Tech enables benefits of scale and access to expertise across highly complementary geographies and client relationships, and brings operational infrastructure and financial strength to support WYG’s long term growth ambitions.
“Going forward, whether we become part of the Tetra Tech Group, providing the benefits of scale and access to expertise across highly complementary geographies and client relationships, or with a strengthened balance sheet through the implementation of a fundraising and our recovery plan, we believe WYG is well placed for a return to profitability and positive cash flows.”
WYG said its order book was up 0.2% to £166.7m as at 31 March 2019 (31 March 2018: £166.4m), which it said “provides a sound basis for current year trading.”
It said no final dividend payment was recommended due to its ongoing focus on reducing debt.
McCormick added: “While revenues have held up well in most areas and we have recently won a number of substantial new projects in our International Development business, our Consultancy Services business in the UK has been impacted by cautious business sentiment and political uncertainty. As a result, we did not see the marked increase in UK activity that has been typical of the final quarter of our financial year in the past. The combination of traditionally lower margins in the International Development business and the impact of the deferral of activity on certain projects leading to overcapacity in our Consultancy Services business meant that profitability for the year as a whole was approximately half of what we had originally expected.
“Over the past six months we have been implementing a number of actions to improve profitability and reduce our net debt position in line with our stated strategy of developing a simpler, more robust platform and driving efficiencies with a view to returning to growth in the medium term.”
