Consultancy engineering its way back into profit amid UK turmoil

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ENGINEERING and design consultancy WYG aims to return to profit over the next 18 months as it ramps up its global expansion.

The Leeds-based group is expanding its international order book to combat what it describes as challenging trading in the UK.

Chief executive Paul Hamer said the UK and Ireland now accounts for about 60 per cent of turnover with overseas markets providing the other 40 per cent.

Just three years ago, the UK and Ireland accounted for 90 per cent of the group’s business and Mr Hamer said the plan is to have a 50/50 split by 2014.

“The UK market is difficult and will get tighter. 2012 will be very challenging in the UK, but there are opportunities for us,” he said.

The group’s key UK clients are the Ministry of Defence, which is in the process of rebasing the British Army from Germany back to the UK, and the Ministry of Justice’s court and prison estates.

“Whilst current trading conditions in the UK remain very challenging except in selected areas of activity, we welcome the Government’s commitment to additional infrastructure investment in its Autumn Statement which we expect to bring forward some potential opportunities for us,” said Mr Hamer

WYG is also seeing strong demand from retailers such as Sainsbury’s, Tesco, Asda, Ikea and Aldi.

“The supermarket sector is one area that’s got funding,” said Mr Hamer.

The group hopes to take out over £4m of legacy costs over the next three years.

Earlier this year, WYG completed a capital restructure after entering the recession with a heavy debt burden, resulting in banks and shareholders seeing their stakes heavily eroded.

“With the balance sheet in place we can look out with a lot more confidence,” said Mr Hamer.

“The strategy is a very tightly focused group on seven sectors in five regions.”

The group reported an 18 per cent fall in turnover to £68.5m during the six months to the end of September. Pre-tax losses fell to £5.2m, compared with £2.6m losses during the six months to the end of December.

The group said these were in line with expectations.

WYG ended the six months with net cash of £24m, compared with net debt of £38.5m at the end of 2010.

Aside from the UK and Ireland, WYG is focusing on Central & Eastern Europe, the Commonwealth of Independent States (CIS), Turkey, the Middle East & North Africa, and Asia Pacific.

Mr Hamer said there are significant opportunities in Turkey, Abu Dhabi, Saudi Arabia and Qatar.

WYG has undertaken early stage drainage, sewerage treatment and irrigation designs for the Wadi Al Alsa project in Saudi Arabia, a 150,000 population regeneration project near Jeddah.

Egypt and Libya could also present opportunities once new contracts come through following regime change.

The Moscow business is extending its reach to Kazakhstan and the expanding mining operations in Mongolia. WYG said the de-regulation of the energy market in Russia and the introduction of a green tariff will remove barriers to development of new waste infrastructure.

Central & Eastern Europe includes the Balkans and WYG is now the market leader in Poland. It also recently opened WYG Serbia and WYG Croatia.

While countries in Asia Pacific such as China are saturated, WYG sees scope for expansion in countries like Vietnam and Laos.

In a separate statement yesterday WYG announced the appointment of a new finance director, Sean Cummins, to replace David Wilton, who is leaving following the financial restructuring in July.

Mr Cummins is the former finance director of design and engineering consultancy Scott Wilson and chemicals group Yule Catto.

Chairman Mike McTighe said: “He has extensive relevant public company experience and has deep knowledge of the global consultancy sector through his time at Scott Wilson.

“Following the capital restructuring completed in July, WYG has entered a new growth phase in its development and Sean is ideally equipped to help lead WYG in the execution of its recently articulated international strategy.”

Mr McTighe also paid tribute to Mr Wilton for his role in ensuring the group’s survival.

“With his corporate finance background, he played a key role over a very challenging two-and-a-half-year period that culminated in July’s capital restructuring.

“We now have a very sound platform from which to grow and, for that, David should take considerable credit.”