‘Significant milestone’ for WYG as it makes a return to profit

Paul Hamer, chief executive of WYG, said: “The group’s better than expected return to adjusted profit before tax... marks a significant new milestone in the progress of the group. 

“In the UK, we have been successfully winning work in our key sectors, including urban and commercial development, defence and justice and energy and waste, despite continued subdued UK market conditions.”

He said the company, which last year won a significant two-year contract with the Ministry of Defence to help run Camp Bastion, the main military base in Afghanistan, is also well positioned for international growth opportunities thanks to its expertise in donor-funded projects and its relationships with key clients.

Revenues dipped to £125.7m from £139.9m, which WYG said reflected a transition year due to a planned focus on core markets and a reduction in its historical reliance on bonded European Union donor-funded work.

WYG’s adjusted operating profit figure was £1.8m, compared with a loss of £3.5m in the year before, while it recorded a statutory pre-tax loss of £3.3m, compared to £11.8m profit last year.

In a separate announcement, WYG said that it is a major part of the consortium that has been awarded a “significant” donor funded contract to develop a climate resilient infrastructure development facility in South Africa.

This aims to develop small-scale infrastructure to improve access to water for many of the 95 million people living in a number of countries in the Southern Africa Development Community region. 

WYG said the programme will seek to improve reliable access to water, the lack of which is already constraining human development and economic growth in the region. The contract has a total value of £18.2m over two years with the possibility of a further extension subject to satisfactory performance.

WYG, formerly called White Young Green, has been on a painful restructuring journey in recent years, including hundreds of job losses and office closures. It bought 38 companies between 1997 and 2007, leaving it with a hefty debt burden. The business said yesterday it has maintained its focus on working capital improvements and reducing overheads.

Sean Cummins, financial director, said: “Another area we have started to work on is our margin improvement and really being more selective on the type of work we take on.” He said the group is “delivering on its promises” and is “quietly confident and quietly pleased” about its results.

Analysts from Numis Securities said WYG’s annual results showed “continued progression”, adding: “We think management has good momentum in its efforts to improve margins further and the target of £9m plus profit before tax for FY16 (its financial year 2016) – with the assistance of bolt-on acquisitions – looks in range.”

The group, which now employs 1,400 people in total, slightly down on its 2012 financial year and includes around 220-230 people in Leeds, said it saw improved profitability across UK, Eastern Europe and the rest of world, with stable profits in Middle East and North Africa.

Mr Hamer said he anticipates the profit outturn for the current financial year to be around 10 per cent higher than current market expectations for the year as a whole.

On the South African contract win, Mr Hamer said: “This contract win is testament to the range and quality of our technical expertise.

“It builds on our strong track record in delivering the £68m infrastructure preparation facility in the Western Balkans, which has financed nearly 130 projects, leveraging £4.5bn in infrastructure investment and our significant water infrastructure experience.

“It also clearly demonstrates the group’s progress with our strategy of generating good quality international revenues and diversifying our client base through collaborative partnerships.”

The group’s four trading companies in the Republic of Ireland were placed into liquidation in September last year.

It said this was as a result of challenging trading conditions in Ireland combined with “unsustainable property costs and legacy claims” associated with the companies prior to acquisition.

WYG said the estimated 5m euros which would have been required to support the costs of these businesses is being redirected towards underpinning the growth initiatives of the wider business.