Jobs saved as WYG buys back Belfast business

The Leeds-based group announced plans last month to wind up its loss-making Irish operation – which consisted of four businesses in the Republic of Ireland and three in Northern Ireland – after failing to turn it around.

WYG said it was unable to create a sustainable shape for its Republic of Ireland businesses despite its best efforts in a move that cost 50 jobs.

However, the plan was always to buy back the three Northern Irish businesses, which continue to trade profitably and are unaffected by the property issues that have dragged down the Republic of Ireland businesses.

Last month, WYG said liquidators would be looking for other buyers for the Northern Irish businesses and said there was no certainty its bid would succeed.

But yesterday it said it had been successful.

Provisional liquidators were appointed to the Irish business, which analysts say earned revenues of about £2m in its latest financial year.

This should free up about £4m of costs, mainly tied to property, which the group said will be re-invested in future “growth initiatives”.

WYG said “wider economic conditions in Ireland and the severe decline in the Irish construction market” forced its hand.

The Irish business grew through 12 acquisitions between 1999 and 2008.

The group said the weak Irish economy compounded its unsustainable property costs and legacy claims associated with former acquisitions.

Paul McCann and Stephen Tennant of Grant Thornton were appointed provisional liquidators of the Irish business.

In an update for the six months to September 30, WYG said trading during the first half of the financial year has continued in line with management expectations. The group expects to report a small underlying operating profit for the half year.

Paul Hamer, WYG’s chief executive, said: “Having stated, on June 7, that we were confident of returning the group to operating profit in the near term, we are delighted to announce that this milestone in the group’s turnaround will be reached in the first half of the current year.

“Now that we have achieved this significant target, we are well placed to progress with our shift in focus from internal improvements to creating higher quality revenues through the delivery of our global integrated strategy and look forward to updating the market on our progress in November.”

WYG, which has worked on a wide range of projects ranging from Barnsley’s marketplace makeover to improving transport in Bulgaria, is due to announce its half year interim results on November 29.

The group, formerly called White Young Green, has been on a painful restructuring journey in recent years, including hundreds of job losses, office closures and a hugely dilutive capital restructure last summer.

It completed a “survival restructure” in 2009 which saw shareholders substantially diluted and its banks take a 60.5 per cent equity stake.

WYG bought 38 companies between 1997 and 2007, leaving it with a hefty debt burden.

Faced with the risk of insolvency when the recession arrived, its current management has cut over £110m from its cost base.

The group’s key UK clients are the Ministry of Defence and the Ministry of Justice’s court and prison estates.

WYG said last year’s capital restructuring has created a ‘New WYG’ with a strong balance sheet.

Analysts have pencilled in operating profits of £1.5m in the current year and £4m in 2013.

The company has recently secured key international orders in the West Balkans, Eastern Europe and the Middle East/North Africa.