WYG ponders acquisitions as it steps out on the path to growth

DESIGN and engineering consultancy WYG is considering resuming acquisitions for the first time in three years as it tries to plot a course to growth.

The Leeds-based company, which works on projects ranging from designing new schools to planning transport for nuclear power stations, said it is mulling ways of refinancing the company to create a “positive growth environment”.

“We would like to buy something by the end of this calendar year – that depends on us finding it,” said finance director David Wilton.

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“It’s up to us to grow and there are markets we want to be accessing through acquisitions.”

WYG, formerly White Young Green, called a halt to acquisitions in early 2008 after becoming bloated with debt as a result of 38 acquisitions since 1997.

It was forced to do a debt-for-equity swap in early 2010, which saw its banks Lloyds, Royal Bank of Scotland and Fortis take 60.5 per cent of its shares.

“We are going to be very selective,” said Mr Wilton, adding acquisitions will expand its international reach. “If we buy something we are going to integrate it into the group. There’s a history here that pre-dates the current team of how not to do acquisitions.”

WYG yesterday reported falling sales and profits as it continues to battle tough UK conditions, which forced it to cut 400 jobs between July and December.

Revenues slumped 27 per cent to £83.7m and it reported an operating profit of just £0.1m compared with £3.7m a year earlier.

After exceptional items such as redundancy payments, office closures and a £12m goodwill impairment charge, WYG reported £22m pre-tax losses, against £4.5m losses a year earlier. Its shares slumped 14 per cent to 15.5p.

“We’ve had two years of cutting and fixing,” said Mr Wilton. “It’s been pretty traumatic.

“We were doing an awful lot within the business. That was all going on and against that we had a particularly difficult UK market.

“We’ve pretty much finished that now. I would like to think we’re at the bottom and it’s likely to get better rather than worse.”

WYG stepped up its focus on international markets during the six months, opening offices in Syria, Croatia, Bosnia and South Africa. Its international order book was £89.2m, up from £76.6m in 2009. The group’s net debt increased from £33.9m at the end of June to £35.3m at the end of December.

WYG hopes to sort out its financing by the end of June, to give it sufficient capital to access growth opportunities.

“We’re looking at the options,” said Mr Wilton. “We’ve not reached a decision about the route to go down. The early signs are encouraging but we’ve got a way to go.”

WYG is close to selling its Adams Kara Taylor structural engineering business to a Swedish consultancy to help cut debt.