WYG secures contract to run military base in Afghanistan

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Engineering and design consultancy WYG has won a significant two-year contract with the MoD to help run Camp Bastion, the main military base in Afghanistan.

The Leeds-based group said the contract’s value is confidential, but analysts estimate it to be worth £5m to £10m.

WYG will work alongside a multi-disciplinary team made up of 60 Royal Engineers to manage both the camp and other Afghan operating bases.

Camp Bastion, which is home to more than 20,000 people, has a 40km perimeter wall, making it roughly the size of Reading. It has its own bus service, hospital, fire station and police force and its airport is effectively the UK’s third busiest.

“We will help the airport to operate seamlessly without anyone worrying about it,” said WYG’s chief executive Paul Hamer.

The group will cover all the camp’s needs including waste removal, power, transportation and energy.

Clive Anderson, global head of defence and justice, WYG said: “Securing this contract is a significant milestone for WYG. It reinforces our ongoing support to the MoD, one of the group’s most important clients.”

Col Tony Tait, MoD, said: “I am very pleased to have WYG on board supporting us in our vital role in Afghanistan, not only providing the infrastructure to enable ongoing military operations, but also in developing the opportunity for the local Afghan community to transition to a self-sufficient status.”

Mr Hamer said the contract will place WYG in a good position to win more work helping to rebuild the country once Western forces pull out.

“We have a strong CV of post conflict rebuilding in the West Balkans. This contract will give us a great position to work in the region in the future,” he said.

He was speaking as WYG reported an improvement in the second half and said it is on track to make a profit this year.

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

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

Numis analyst Will Wallis said: “Revenue has stabilised and we believe that the group is in good shape to move back through to profit. Management is now increasingly focused on improving the underlying quality of the business.”

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

The UK trading environment was described as more stable, with improvements in certain UK public and private spending activity while WYG sees good international prospects.

Mr Hamer said: “The first year of the ‘new WYG’ has been a year of tremendous change and I am pleased to report that we have delivered a financial performance consistent with management’s expectations at the time of the placing in July 2011.

“The considerable improvement in the group’s performance in the second half of the financial year compared with the first half reflects the continuing benefits of the board’s strategy and the excellent progress made with implementing the ‘self help’ measures identified last year.”

The group completed a major capital restructuring last July which included a placing to raise approximately £30m, the conversion of £51m of the group’s net debt into convertible shares and the redesignation of the group’s preference shares.

The company said this created a ‘new WYG’ with a strong, debt-free balance sheet and significant net cash balances. Gross revenue over the year to March 31 was £139.9m. The company reported revenue of £121.5m in the nine months to March 2011.

The group made an operating loss of £3.5m, against a £100,000 profit in the nine months to March 2011. It made an operating loss of £2.5m in the first half, but this was reduced to a £1m loss in the second half.

Mr Hamer said the UK and Ireland now account for about 56 per cent of turnover with overseas markets providing the other 44 per cent. Just four 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.

“We’ve got momentum now,” said Mr Hamer. “Against that backdrop we’re going to return the group to positive operating profit in the near term. We’re building the group going forward with quality revenue and quality clients.”