RNS Number:7749R
White Young Green PLC
27 September 2005
For Immediate Release 27 September 2005
WHITE YOUNG GREEN PLC
Preliminary results for the year ended 30 June 2005
White Young Green Plc, consultant to the built, natural and social environment,
announces its preliminary results for the year ended 30 June 2005.
Highlights:
- 60% increase in turnover to #143.9m (2004: #89.9m)
- 46% increase in profit before tax and goodwill amortisation to
#10.0m (2004: #6.9m)
- 40% increase in profit before tax to #8.1m (2004: #5.8m)
- 27% increase in adjusted earnings per share to 18.0p (2004: 14.2p)
- 19% increase in earnings per share to 13.2p (2004: 11.1p)
- 10% increase in dividend per share to 6.5p (2004: 5.9p)
- 27% increase in net order book to a record of #253m
- 86% of 2005 net turnover already secured for 2006
- Two acquisitions completed in second half of year
- Eighth consecutive year of double digit organic growth
Commenting on the results, Chairman Peter Wood said:
"It gives me great pleasure to report a year of considerable success for White
Young Green (WYG) with a range of key short term objectives having been achieved
which, collectively, reflect the increased growth momentum and quality of
earnings now apparent throughout the business.
WYG has started the new financial year with confidence and optimism having
delivered yet another year of double digit organic growth, an order book at
record levels and an operating margin on net turnover of 10%."
For further information, please contact:
WHITE YOUNG GREEN PLC Tel: 0113 278 7111
John Purvis, Chief Executive
Bob Hartley, Finance Director
BUCHANAN COMMUNICATIONS Tel: 020 7466 5000
Tim Anderson / Rebecca Skye Dietrich
CHAIRMAN'S STATEMENT
Introduction
It gives me great pleasure to report a year of considerable success for White
Young Green (WYG) with a range of key short term objectives having been achieved
which, collectively, reflect the increased growth momentum and quality of
earnings now apparent throughout the business. Net turnover from in-house
services has exceeded #100m, profit before tax and goodwill amortisation has
risen above #10m and, for the first time, operating margin on net turnover has
reached 10.0% (2004: 9.6%). When those achievements are read in conjunction
with an order book up 27% to #253m (2004: #200m), a demonstrably successful
acquisition strategy and a 12% rate of underlying organic turnover growth then
the year to June 2005 has clearly been a landmark year for the Group.
The acquisitions completed in the second half of the last financial year have
all performed strongly in their first full year under WYG ownership. They have
also contributed significantly to a 60% increase in turnover to #143.9m (2004:
#89.9m) and a 53% increase in operating profit before goodwill amortisation to
#11.6m (2004: #7.6m). IMC Consulting, now re-badged as WYG International, has
experienced unprecedented levels of new business with long term net order book
up 63%, to #34.2m (2004: #21.0m). This includes notable recent successes in
fusing the traditional WYG engineering, environmental and planning skills with
the macro social and economic regeneration expertise already available within
that business.
Results
Gross turnover grew by 60% in the year to #143.9m (2004: #89.9m) and included a
contribution of #1.8m from acquisitions completed during the course of the year.
The underlying growth in turnover from continuing operations was 12%. Turnover
attributable to third parties, on which the Group does not make a margin,
increased to #27.6m (2004: #11.3m) as a consequence of the use of a wide range
of specialist sub-consultants in the international arena. Turnover net of
payments to third parties therefore grew by 48% in the year to #116.3m (2004:
#78.6m).
Operating profit before goodwill amortisation increased by 53% to #11.6m (2004:
#7.6m) and included a contribution of #0.2m from acquisitions completed during
the course of the year. Operating profit after goodwill amortisation increased
by 49% to #9.7m (2004: #6.5m).
Operating margin, calculated as operating profit before goodwill amortisation
divided by turnover net of payments to third parties, improved further to 10.0%
(2004: 9.6%) underlining WYG's position as one of the most efficient and
profitable professional consultancies in the support services sector.
Earnings per share adjusted to exclude goodwill amortisation increased by 27% to
18.0p (2004: 14.2p). Basic earnings per share in the year increased by 19% to
13.2p (2004: 11.1p). The average number of shares in issue increased by 15%
following the successful share placing and open offer in January 2004 and the
issuing of shares in satisfaction of consideration due for acquisitions.
The balance sheet remains strong and further improvements in working capital
management have been achieved. Overall working capital days reduced in the
period to 85 days (2004: 117 days) due, in part, to the advance payments enjoyed
by WYG International. Excluding those advance payments, the underlying combined
work in progress and debtor days also fell to 107 days (2004: 117 days) whilst
gearing, defined as net debt divided by total net assets, reduced in the year to
28% (2004: 29%). Net debt at the year end was #15.4m (2004: #14.2m) and
interest was covered 7.5 times (2004: 10.5 times) by operating profit before
goodwill amortisation.
Dividend
It is proposed that the final dividend be increased by 11% to 4.1p per share
(2004: 3.7p) making a total for the year of 6.5p (2004: 5.9p). The dividend is
covered 2.8 times (2004: 2.4 times) by adjusted earnings per share and 2.0 times
(2004: 1.9 times) by basic earnings per share. The final dividend will be paid
on 6 December 2005 to shareholders on the register at 7 October 2005.
Acquisitions
On 28 February 2005, WYG completed two acquisitions which strengthened the
Group's position in the strategically important waste management, town planning
and urban regeneration markets.
The acquisition of Robert Long Consultancy Limited, with offices in Southampton,
Cambridge and Huddersfield, has added the complementary skills of waste
management engineering to WYG's portfolio of environmental services. This is
particularly important in the context of recent legislative changes in this
field as well as the significant international opportunities likely to arise in
this sector in the future.
The acquisition of WynThomasGordonLewis Limited, a town planning and urban
regeneration consultancy based in Cardiff, expands WYG's town planning
capability into the Welsh market. It also strengthens WYG's overall capability
and capacity in the strategically important urban regeneration field.
Both acquisitions have integrated well into WYG's existing operations and have
made a positive contribution to this year's results in line with expectations.
WYG will continue to both stimulate organic growth and broaden the skills base
of the Group through further strategic acquisitions which are clearly earnings
enhancing and offer real added value post-acquisition. Good opportunities
continue to arise and the current pipeline is very encouraging.
Board of Directors
The senior management team at WYG has continued to evolve and has been
strengthened in the past year by the recruitment of a further non-executive
director and the promotion from within WYG of an additional executive director.
Brian Duckworth joined the Board as a non-executive director with effect from 1
April 2005. Brian recently retired from the board of Severn Trent Plc on which
he held the positions of Managing Director of Severn Trent Water and Chairman of
Severn Trent Water International. He is also currently a non-executive director
of Redrow Plc and Avon Rubber Plc.
On 1 July 2005 Richard McCaffrey joined the Board as Chief Operating Officer.
Richard has been with WYG since July 2000 and is now responsible for the day to
day management of WYG's operational business. He has over 25 years experience in
the water, environmental and engineering markets having successfully delivered
major projects and managed multi-skilled professional teams within both the
public and private sectors of the economy.
Gareth Cooper retired as Chairman of WYG, and from the Board, at the Annual
General Meeting held on 10 November 2004, after eleven years continuous service,
first as a non-executive director of Ernest Green Holdings Plc and subsequently
as Chairman of WYG. I take this opportunity to add my thanks to Gareth for his
wise counsel and assistance since I joined the Board and also for his valued
service to both companies over the past eleven years. We wish him a very happy
and healthy retirement.
Employees
Since becoming Chairman in November 2004 I have been impressed by the quality
and commitment of staff in all areas of the business. WYG has grown
significantly over the past twelve months whilst retaining the essential ethos,
character and vision that has driven its corporate development over recent
years. This could not have been achieved without the belief, commitment and
enthusiasm of all of its staff including those who are relatively new to the
business. I therefore take this opportunity to thank all members of staff for
their exceptional support and professionalism.
Review of Operations
Operational highlights for the year to June 2005 include the following:
* 27% increase in net order book to #253m (2004: #200m);
* 48% of order book in long term framework contracts extending to 2012;
* 56%/44% public/private turnover split in UK and Ireland;
* 28% turnover growth in private sector business;
* 22% turnover growth in public sector business; and
* Turnover up across all key public and private sector markets.
All of WYG's key skill groups of Engineering, Management Services, Environmental
and Town Planning have enjoyed a very successful year with record levels of new
business contributing to a 27% increase in committed long term order book. The
net order book, exclusive of third parties, now stands at #253m (2004: #200m),
or approximately two years net turnover. The strength of the order book is
reflected in 86% of the net turnover achieved in 2005 already being in place for
2006 along with 63% for the following year.
In the international arena the platform has now been established to
progressively introduce WYG's traditional skills, initially to the well
established development aid funded market and subsequently to a much broader mix
of secure and profitable business. Early successes in that regard on EU funded
projects in Syria and Poland are particularly encouraging. During the course of
the year the WYG International team, engaged in social and economic
regeneration, has also significantly broadened its geographic sphere of
activity. As a consequence, new high profile contracts valued at in excess of
#15m have been secured in Southern Africa.
In Ireland trading continues to be buoyant across all key skill groups on both
sides of the border with organic turnover growth of 16% being generated in the
year and profit margins tending to be on average approximately 4% higher than
the WYG Group average. It is intended to introduce town planning skills to the
Irish business in the near future and to significantly expand the range of
management services available to clients in the Republic of Ireland. This will
be achieved either organically or by acquisition.
In the UK, market conditions continue to be favourable with continuing high
levels of investment in health and education being more than matched by a
significant increase in private sector development work covering residential,
commercial and leisure activities. Turnover in the transportation and
infrastructure sector has also increased by approximately 20% in the year
despite only nominal growth from the rail industry which remains relatively
subdued.
The success of the London 2012 Olympic bid is considered to be excellent news
for the industry as a whole and for WYG in particular, as the Group should
benefit from the role already played in providing early environmental and
infrastructure consultancy services at many of the key venues, on behalf of the
London Development Agency (LDA). The overall spend will be significant with
consultancy appointments likely to be amongst the first major contracts to be
placed by the LDA, Transport for London and, ultimately, the Olympic Development
Agency.
The successful integration of the 2004 acquisitions into WYG is apparent from
the financial results and operating review for the year to June 2005. In
addition to the success of the international business referred to above, the
introduction of cost consultancy skills to WYG in Ireland through the
acquisition of Denis Rooney Associates has been very successful. WYG is now able
to offer clients in both Northern Ireland and the Republic of Ireland a fully
integrated and professionally managed multi-skilled service covering all key
strategic skills. Similarly the broadening of WYG's town planning business to
cover the important residential market, through the acquisition of Hawthorne
Kamm, has also created the opportunity for WYG's environmental and
transportation teams to quickly establish a strong reputation in that sector.
Adopting a consistent ethos and clear corporate strategy continues to drive all
key business decisions including, in particular, the Group's acquisition,
business development and recruitment policies. That strategy is owned equally
by the management and staff and is the cornerstone of the strength, stability
and resilience of the business. It comprises the following key elements:
* commitment to a fully integrated business with single branding;
* development of complementary professional skills around the asset life
cycle;
* maintaining a diverse and flexible sector penetration;
* avoiding disproportionate client or sector dependencies;
* establishment of high level strategic corporate relationships with clients;
* commitment to excellence through the WYG Business Excellence Model; and
* development and empowerment of all staff.
Outlook
The outlook for WYG is very positive and exciting. Having achieved a step
change in the size, profile, skills base and geographic reach of the Company in
the year to June 2005 a positive momentum has been established from which
further significant progress can, and will be made in the years ahead.
Particular areas of opportunity are as follows:
* The internationalisation of WYG's traditional skills has only just begun
but the platform established in 2005 through the acquisition of IMC
Consulting is already beginning to reap rewards;
* The introduction of cost management skills into Ireland has been a great
success and offers a model for similar skills diversification in Great
Britain;
* The benefits accruing from the introduction and rapid growth of
strategically important town planning skills in England and Wales
encourages a similar strategy to be adopted in Scotland and Ireland;
* The success of the London 2012 Olympic bid has already brought benefits to
WYG and the opportunities for further involvement in the months and
years ahead are significant for all of WYG's key skill groups; and
* The opportunity to increase WYG's penetration of the operating phase of the
asset life cycle, both organically and through acquisition, where the
focus on white collar professional services will continue.
Trading conditions generally remain favourable in both the domestic and
international markets and WYG's ability to sit astride both the public and the
private sectors will enable the Group to continue to benefit from committed
investment in health, education and other public services whilst also maximising
returns from increasing activity in private sector markets.
WYG therefore begins the new year with confidence. Market conditions are
favourable to sustain and feed the Group's ambitious corporate development
plans, the business model that has delivered consistent growth in the past can
continue to do so in the future and the professionalism, commitment and
enthusiasm of a dedicated workforce can reach its full potential as WYG strives
to attain its vision to be leaders in the built, natural and social environment.
CHIEF EXECUTIVE'S REPORT
Introduction
This year has been a year of significant progress and success for WYG with
strong growth in all key geographic markets, sectors and skill groups. That
success has been reflected in a year of record sales and profits with operating
margin on net turnover exceeding 10% for the first time driven by a strong
performance across all areas of the business. As the profile of the business
continues to build there is a growing appreciation amongst clients of the wider
range of life cycle skills now available to them from within WYG which positions
the Group very favourably for the future.
WYG is above all else a people business and it is only through the exceptional
drive, commitment and talent of its people at all levels that success is
achieved. Those qualities are complemented by a corporate ethos which
encourages innovation and the release of entrepreneurial potential, such that
staff feel empowered to take personal ownership of WYG's vision and values and
therefore live them in their own offices, in their own markets and in how they
represent WYG within the wider business community. It is that ethos that
continues to drive consistent double digit organic growth.
Segmental Analysis by Geography
WYG's overall business falls into three distinct geographic entities which break
down by gross turnover as follows:
Great Britain (UK excluding Northern Ireland) 63%
Ireland (Republic of Ireland plus Northern Ireland) 13%
International 24%
* Great Britain
Gross Turnover #91.2m
Net Turnover #80.5m
Operating margin on Net Turnover 9%
Organic rate of turnover growth 12%
The largest proportion of WYG's turnover continues to be generated in England,
Scotland and Wales where all key WYG skills groups contribute to a gross
turnover of #91.2m or 63% of the Group total. Trading conditions remain
favourable with a noticeable increase in private sector activity compared to
this time last year. Margins in the GB business are lower than the Group
average but there is scope for further improvement in certain areas of business
activity. This is particularly so in the rail sector where disruption
associated with further client re-organisation during the course of the year has
impacted profits.
* Ireland
Gross Turnover #18.3m
Net Turnover #15.8m
Operating margin on Net Turnover 13%
Organic rate of turnover growth 16%
WYG Ireland contributes 13% of overall Group turnover and comprises engineering,
environmental and management services skill groups under a dedicated chief
executive. WYG Ireland now employs over 280 people and operates as an
integrated all-Ireland business from offices in Belfast, Londonderry, Dublin,
Limerick and Cork. It is rapidly becoming one of the largest multi-skilled
consultancies in Ireland.
Market conditions in Ireland are buoyant at the present time, particularly in
the Republic of Ireland where GDP growth continues to outstrip that of the UK.
As a consequence all WYG Ireland skill groups have enjoyed a successful year
with profitability well ahead of equivalent returns in the UK.
* International
Gross Turnover #34.4m
Net Turnover #20.0m
Operating margin on Net Turnover 13%
66% increase in net order book to #35.0m
Trading conditions for WYG International's core social and economic regeneration
consultancy activities remain very favourable and this is apparent from a 66%
increase in net order book to #35m in the year to June 2005. This represents
almost two years net turnover to be implemented over a four year period with
growing confidence that this will strengthen further over the first six months
of the new financial year. However this has been achieved against a background
of significant geographic re-focusing and a complete change in the EU bidding
and funding mechanisms in the team's principal and most mature market in Poland.
The latter development is associated with a move from accession funding
managed centrally to structural funding managed locally. The WYG International
team have responded well to both of these challenges and are now reaping the
rewards with a flow of new contract awards over the summer months, including
major projects in South Africa and Poland.
WYG's International business is dominated at the moment by social and economic
regeneration work, although the policy of broadening the remit of the team to
include the higher level project management of more technically focused
infrastructure and environment projects is beginning to bear fruit. It is WYG's
intention to ultimately establish a sustainable business for all of WYG's more
traditional skills in each of the principal WYG International offices, although
this may take some time to come to full fruition.
A good example of the type of project where the fusing of WYG's traditional
skills with those of the ex-IMC Consulting team can bring real added value is a
recently secured project in Syria. This is a Euro10m EU funded contract to manage
the modernisation of municipal administration throughout Syria utilising, for
the first time, many of WYG's traditional infrastructure, environmental and
property related skills. The project focuses on strengthening the role,
responsibility and capacity of local government in Syria in areas such as urban
planning, property management, public-private partnerships, economic
development, integrated public transport strategies, solid waste management and
sustainability policies. It applies best practice from across Europe to six
pilot cities over an initial 42 month delivery period.
Segmental Analysis by Skill Group
WYG provides an integrated multi-skilled service to clients around the four key
skill groups of engineering, management services, environmental sciences and
town planning, and all of those skill groups are fully represented on the WYG
Group Operations Board. The balance of those skills has changed significantly
over the last eight years and that balance will continue to change in the future
as the business evolves to broaden its base even further. The breakdown of
gross turnover by skill set in the year to June 2005 was as follows:
Engineering 49%
Management Services 31%
Environmental 16%
Town Planning 4%
* Engineering
Although engineering now represents less than 50% of WYG's overall turnover it
remains the largest single skill group generating more than #68m of gross
revenue, up 19% on the previous year, or 11% organic growth when the
contribution from acquisitions is excluded. Operating margins for engineering
services vary considerably but generally range between 6% and 12% of net
turnover.
WYG now offers a full range of engineering skills to clients from all principal
offices including civil, structural, transportation, mechanical and electrical
engineering disciplines. These are brought together to provide integrated
solutions on a wide range of projects including roads, bridges, railways,
buildings, sewage treatment works, flood defences, ports, airports, waterways
and numerous other important elements of the nation's infrastructure.
WYG's growing reputation as a leading edge mechanical and electrical engineering
consultant was confirmed when the Company was awarded the prestigious Building
Services 'Large Consultancy of the Year' award in June 2005.
In addition, WYG's highway engineering business achieved a significant milestone
in August 2005 when Laing O'Rourke, with WYG as designer, was awarded the 'Early
Contractor Involvement' contract for the A1 Morpeth to Felton Improvement by the
Highways Agency. This #84m project involves upgrading the existing single
carriageway to dual two lane standard. The scheme also includes the
construction of five bridges at grade separated junctions together with a major
180m long three span bridge across the deeply incised River Coquet Valley which
is a designated 'Site of Special Scientific Interest'.
* Management Services
Management services is the collective term used within WYG to describe a wide
range of non-design related skills including project management, property
management, cost management, high level advisory services, dispute resolution,
health and safety management, relocation management and energy management. This
is the fastest growing skill group within WYG and enables the Group to establish
a much more strategic relationship with clients than would otherwise be the case
with purely technical services.
Management services is now the second largest skill group within WYG generating
over #47m of gross revenue, including a contribution of more than #34m from WYG
International. Operating margins on net turnover are much higher from
management services than from engineering services varying between 12% and 20%.
Discounting the significant turnover contribution from WYG International and
other relevant acquisitions the underlying organic rate of growth of management
services in the UK and Ireland was 16% in the year to June 2005.
Of particular note in the period was the very positive impact that the
introduction of cost management services in Ireland has had on the profile and
perception of the Group as a multi-skilled consultancy both north and south of
the border. As a consequence WYG is now providing cost management services and
engineering services on a range of high profile projects including the 'Invest
in Northern Ireland' headquarters building in Belfast and the #38m Downpatrick
Acute Care Hospital. At the present time WYG provides cost management services
to clients in GB through supply chain partnerships with other specialist support
consultancies.
* Environmental
WYG provides a full range of environmental services to clients including noise,
air and water quality, environmental management systems, ecology, environmental
impact assessments, waste management, landscape and urban design, pollution
control, geotechnical investigations, asbestos surveys and contaminated land
remediation services. These now represent 16% of WYG's gross turnover or just
under #23m of annual revenue. The underlying organic rate of turnover growth of
environmental services within WYG is currently 14% per annum although in the
year to June 2005 total year on year growth of 28% was achieved with the
assistance of acquisitions completed in the year. Operating margins on net
turnover in the environmental sector vary between 10% and 16% depending both on
skill and location.
WYG is now recognised as being at the forefront of environmental thinking and
best practice by many national and international agencies tasked with protecting
the global environment against increasing threat. As an example, climate change
is at the forefront of the environmental challenges facing clients whether in
government or in business. Addressing this particular problem presents new and
exciting challenges as regulatory policies are still evolving and new solutions
and methodologies have yet to be devised.
A graphic example is the predicted rise in sea level squeezing out
internationally, nationally and regionally important wetland sites along the
coastal fringe, the loss of which would have a profound impact on UK wildlife if
replacement areas could not be found. WYG Environmental has been appointed by
English Nature to utilise its ecological, soils and hydrological expertise to
devise Replacement Wetland Design and Reporting Criteria in its 'Coastal
Squeeze' programme so that practical replacement sites can be identified,
secured and successfully established.
* Town Planning
WYG Planning has grown significantly over the last three years and is now one of
the top ten planning consultancies in the UK with offices in most key regional
centres in England and Wales. In the year to June 2005 gross turnover grew by
94% from #3.1m to #6.1m whilst the underlying organic rate of turnover growth
was maintained at an impressive 17%. Operating margins on net turnover are
amongst the highest in WYG varying between 15% and 20% compared to a Group wide
average of 10%.
There remains significant scope to further expand the geographic reach of WYG
Planning and it is hoped to extend planning skills to Ireland and Scotland in
the near future.
More and more planning work is now being commissioned by national and regional
clients under long term framework contracts and WYG Planning is well positioned
to take full advantage of this trend as a consequence of its national network of
offices and readily available support skills. During the course of the year
important framework contracts were secured with Sainsbury's in the south west
and south east regions, Linden Homes and the South West Regional Development
Agency (SWRDA). The latter will extend to June 2009 and will be wide ranging
from advice on specific major development proposals, through the planning
application and planning policy stages to the presentation of public inquiry
evidence on behalf of SWRDA.
Sector Analysis
The strength and resilience of WYG continues to be founded in the Group's
diverse and balanced sector penetration which enables it to ride the sequential
peaks of both public sector and private sector investment by being equally
responsive to both opportunity and threat in any one sector. Having a business
ethos built on flexibility in terms of resource allocation, management structure
and business focus, and matching this with a real commitment to demonstrable
excellence and sustained client care in all sectors of business activity,
enables WYG to minimise the impact of any fall off in investment in one sector
whilst taking early advantage of any increase in investment in another. This
philosophy provides WYG with real resilience and stability and positions the
Group well to deliver consistent and sustainable growth.
In the year to June 2005 the growth in private sector turnover in the UK and
Ireland outstripped that in the public sector for the second consecutive year
although both sectors grew in excess of 20% per annum. As a consequence the
private sector element of WYG's domestic gross turnover increased from 42% to
44% in the year with the public sector element, whilst growing significantly in
quantum terms, reduced as a proportion of gross turnover to 56%. These figures
exclude the impact of WYG International's contribution to gross turnover as this
would distort the trend analysis.
Private sector turnover in the UK and Ireland increased in the year by an
average of 28% or #10.7m in quantum terms. This was dispersed across all of the
following key private sector markets with the largest increase of 70% being
experienced in the commercial, leisure and residential development sector:
Power and Utilities Up 22%
Industry Up 23%
Development Up 70%
Retail Up 2%
Financial Services Up 16%
Public sector turnover in the UK and Ireland also increased in the year but at
the slightly slower pace of 22% per annum with the most significant increases
being in the health and education sector as shown below:
Transportation and Infrastructure Up 20%
Health and Education Up 32%
Law and Order Up 8%
Defence Up 26%
It is of note that, as anticipated, last year's reduction in defence related
work has been reversed as the large regional prime contracts awarded in 2004 are
now settling down into steady state implementation. The large increase in
health and education business was equally spread between both of those
sub-sectors whilst almost all of the growth in the transportation and
infrastructure sector was generated by the highways and traffic market with only
marginal growth from the rail industry.
Life Cycle Professional Services
Planning Phase 42%
Implementation Phase 42%
Operating Phase 16%
WYG provides professional consultancy services to blue chip clients across all
key sectors of the UK and Irish economies, supporting them in the planning,
implementation and operation of their built assets, the efficient and
sustainable utilisation of their natural assets and the development of
management systems and processes associated with those assets. This range of
services from initial planning through to eventual replacement embraces both
their investment and operational activities.
Although many of WYG's skills and services are utilised throughout an asset's
life cycle, others are specific to particular stages of the cycle.
During the planning phase of the asset or project WYG's town planning,
regeneration, environmental, geotechnical, transportation and utility services
skills are of particular importance as they determine the viability and whole
life cost profile of any capital investment proposal. They also represent an
opportunity for early involvement in the procurement process.
Examples of major projects on which WYG has been appointed to provide
strategically important planning phase services in 2005, include the following:
* Environmental support to the London Development Agency at four of the
London 2012 Olympic venues;
* Conceptual engineering, transportation and environmental services to
Balfour Beatty, preferred bidder on the #520m Birmingham New Hospitals PFI
project. Financial and contractual close is imminent following which the
project will proceed to the implementation phase; and
* Enabling services to facilitate the regeneration and development of
Wolverton Park. The scheme is part of Wolverton Regeneration Strategy and
is based on the redevelopment of part of the former Wolverton Rail Works
site, including Grade II listed buildings, with the whole area being
located within the Wolverton conservation area. The scheme has an
estimated total value of #71m and WYG is providing town planning,
environmental, highways, traffic, rail engineering and utilities
engineering consultancy services.
During the implementation stage of the life cycle the more traditional WYG
project management and multidisciplinary design skills remain key to the success
of that creative activity, irrespective of whether the procurement process
involves public or private sector funding. Also of increasing importance during
this stage of the process is sustainable design and a clear awareness of the
wider health and safety implications of design decisions.
Examples of major projects on which WYG has been appointed to provide
implementation phase services in 2005 include the following:
* Lead designer for a major strategic upgrading and renewals programme at
Kings Cross Station, London. The scope of work includes new access
arrangements, roofing replacement works and improvement programmes
throughout the station. This major new project will include significant
input from WYG's rail, environmental and engineering disciplines; and
* Cost management services on the #60m Cathedral Quarter mixed use
development in Belfast. The scheme consists of 132 residential apartments,
a 150 bedroom international hotel, 611 space multi-storey car park, ground
floor retail space and first floor office space.
Finally, during the operational or maintenance phase, when the asset is actually
put to use, be it a building, piece of infrastructure or utility supply, then
WYG's maintenance, facilities consultancy, property management, environmental
management and occupational health and safety skills are in high demand.
Examples of projects on which WYG has been appointed to provide operational
phase services in 2005 include the following:
* Property management services to the Home Office civil estate across the UK
providing 24/7 helpdesk facilities, the setting up and management of
facilities management contracts and the establishment of asset registers
and long term maintenance plans and budgets;
* Environmental, inspection and evaluation services at County level on behalf
of DEFRA in support of the flagship 'Cleaner Safer Greener Network'
initiative to improve local environmental quality with particular reference
to the street scene; and
* Facilitation services to the CBI in support of the roll-out of their
'Contour' benchmarking tool to over 300 users. Contour is a facilitated,
self assessment benchmarking tool which enables comparison of
environmental, health and safety performance against a best practice model
and a database of past users. Participating organisations also benefit
from being able to identify areas of strength and establish where action is
needed to drive improvement.
The availability of all of these life cycle skills within WYG's in-house
resources enables the business to engage with key clients across the full
spectrum of their activities and responsibilities. It facilitates continuous
and constructive dialogue with clients and provides significant opportunities
beyond the normal pattern of investment cycles.
Long Term Framework Contracts
Long term framework contracts represent an increasingly important part of WYG's
overall portfolio. They generate a continuous, substantial and reliable flow of
work over a long period of time without the need to re-tender, or re-negotiate,
individual contracts for each new project. They therefore provide long term
visibility of future earnings, reduce bidding and marketing costs, and
facilitate the establishment of long term collaborative relationships with both
the client and the supply chain. They also allow technical resources to be more
effectively planned and deployed and, as a consequence, efficiency is gradually
increased particularly when they comprise a large number of smaller individual
projects which are all similar in nature.
Framework contracts now conservatively represent 48% of WYG's total order book
equating to #121m in quantum terms assuming no renewals. This is an increase of
14% on the previous year and is spread across a total of 240 separate contracts
across the Group. The long term nature of these contracts is reflected in the
fact that over 50 of them, worth approximately #68m in forward fees, now extend
up to or beyond 2010. Examples of important new framework contracts secured
during the course of the year to June 2005 include the following:
* The Office of Government Commerce has awarded WYG a national framework
contract for a wide range of property related professional services to be
made available to all Central Government departments and Local Authorities
for a period of four years commencing in November 2004. The purpose of the
framework is to provide property managers with access to independent
multidisciplinary professional support, advice, assistance, planning and
project management services to supplement their in-house teams.
* QinetiQ has appointed WYG as the sole provider of Professional Consultancy
Services in support of their Long Term Partnering Arrangement (LTPA) with
the MoD. WYG will provide a wide range of multidisciplinary consultancy
support to construction activities across the QinetiQ estate including
Boscombe Down and the South Coast, West Wales, Cumbria, Scotland and the
Hebrides.
The LTPA between MoD and QinetiQ is the single largest Prime Contract signed by
MoD and has a 25 year duration. The QinetiQ sites are located throughout the UK
and will provide ongoing commissions to the business in diverse locations.
* Transport for London (TfL) has appointed WYG to their Engineering and
Project Management Framework Agreement for the provision of Rail
Engineering services. The framework will last for a 4 year period and
support delivery of TfL's #10 billion investment programme.
Order Book
WYG's net order book has increased in the year by 27% to a total of #253m
comprising #121m from framework contracts and #132m from individual projects.
Orders of #100m already secured for 2006 are equivalent to 86% of the 2005 net
turnover. This is an extremely strong position to be in at the beginning of the
year given that WYG's average monthly net order intake for the 12 months ending
30 June 2005 was #10.5m per month.
Summary
WYG approaches the new financial year with confidence and optimism having
delivered yet another year of double digit organic growth, an order book at
record levels and an operating margin on net turnover of 10%.
Market conditions in the UK and Ireland continue to be favourable across both
the public and the private sectors whilst an effective platform has now been
established for future international growth. The award of the 2012 Olympic
Games to London also provides a further boost to business with professional
consultancies likely to be amongst the first to benefit.
There are also increasing opportunities to broaden the base of the business
through the selective acquisition of strong businesses that offer real added
value potential.
WYG is grateful for the support and commitment of all stakeholders and looks
forward with enthusiasm to delivering further success in the year ahead.
Consolidated profit and loss account
For the year ended 30 June 2005
2005 2004
Note #'000 #'000
Turnover
- Continuing operations 142,129 89,850
- Acquisitions 1,777 -
143,906 89,850
Operating expenses (134,209) (83,323)
Group operating profit
- Operating profit before goodwill amortisation 11,580 7,584
- Goodwill amortisation (1,883) (1,057)
9,697 6,527
- Continuing operations 9,549 6,527
- Acquisitions 148 -
Profit before interest 9,697 6,527
Net interest payable (1,549) (723)
Profit before tax 8,148 5,804
Tax 2 (2,849) (1,926)
Profit for the financial year 5,299 3,878
Dividends 3 (2,636) (2,319)
Retained profit for the year 2,663 1,559
Earnings per share 4
Basic 13.2p 11.1p
Diluted 13.0p 10.7p
Adjusted earnings per share 4
Basic 18.0p 14.2p
Diluted 17.6p 13.6p
Dividend per share 3 6.5p 5.9p
Consolidated balance sheet
As at 30 June 2005
2005 2004
#'000 #'000
Fixed assets
Intangible assets 34,917 34,010
Tangible fixed assets 9,999 7,135
44,916 41,145
Current assets
Work in progress 28,772 24,030
Debtors 39,987 34,401
Cash at bank 5,579 4,586
74,338 63,017
Creditors: amounts falling due within one year (50,899) (39,587)
Net current assets 23,439 23,430
Total assets less current liabilities 68,355 64,575
Creditors: amounts falling due after more than one year (13,954) (14,844)
Net assets 54,401 49,731
Capital and reserves
Called up equity share capital 2,050 1,995
Shares to be issued 1,550 2,433
Share premium account 33,554 30,676
Profit and loss account 17,247 14,627
Equity shareholders' funds (note 5) 54,401 49,731
Consolidated cash flow statement
For the year ended 30 June 2005
2005 2005 2004 2004
#'000 #'000 #'000 #'000
Net cash inflow from operating activities (note 6) 12,756 7,764
Returns on investment and servicing of finance
Interest received 9 12
Interest paid (1,230) (462)
Interest element of finance lease rentals (336) (282)
(1,557) (732)
Tax paid (2,673) (1,653)
Capital expenditure and financial investment
Purchases of tangible fixed assets (2,662) (171)
Sale of tangible fixed assets 196 317
Purchase of own shares for Employee Benefit Trust - (150)
(2,466) (4)
Acquisitions
Purchase of subsidiary undertakings (1,521) (13,338)
Cash balances acquired with subsidiaries 143 2,213
(1,378) (11,125)
Equity dividends paid (2,423) (1,895)
Net cash inflow (outflow) before financing 2,259 (7,645)
Financing
Issue of ordinary shares 70 8,912
Bank loan 7,873 10,000
Bank loan repayments (8,689) (4,391)
Loan note repayments (74) (185)
Capital element of finance lease rentals and
hire purchase contracts (2,832) (2,453)
(3,652) 11,883
(Decrease) increase in cash during the year (note 7) (1,393) 4,238
Statement of group total recognised gains and losses
For the year ended 30 June 2005
2005 2004
#'000 #'000
Profit for the financial year attributable to shareholders 5,299 3,878
Currency translation differences (440) (570)
Total recognised gains and losses for the year 4,859 3,308
1. Financial information
The financial information in this preliminary announcement does not constitute
statutory accounts within the meaning of s240 of the Companies Act 1985.
Statutory accounts for the year ended 30 June 2005 will be dispatched to
shareholders by 11 October 2005 for approval at the Annual General Meeting to be
held on 8 November 2005. The statutory accounts contain an unqualified audit
report and will be delivered to the Registrar of Companies in accordance with
s242 of the Companies Act 1985.
2. Tax
2005 2004
#'000 #'000
UK corporation tax at 30% (2004: 30%)
- current year 2,659 1,648
- prior year (14) 241
Overseas tax
- current year 190 178
- prior year 43 (53)
Current tax 2,878 2,014
Deferred tax - prior year (29) (88)
Total tax 2,849 1,926
3. Dividends
2005 2004
#'000 #'000
Interim paid 2.4p (2004: 2.2p) per share 955 851
Final proposed 4.1p (2004: 3.7p) per share 1,681 1,468
2,636 2,319
4. Earnings per share
The calculations of basic earnings per share are based on the weighted average
number of shares in issue during the year ranking for dividend of 40,005,473
(2004: 34,869,291). Diluted earnings per share is calculated after the effect of
dilutive share options of 345,987 (2004: 114,118) and of shares to be issued in
respect of acquisitions of 564,489 (2004: 1,210,448).
Earnings per share is calculated as follows:
2005 2004
#'000 #'000
Profit for the financial year 5,299 3,878
Earnings per share
Basic 13.2p 11.1p
Diluted 13.0p 10.7p
4. Earnings per share (cont'd)
Adjusted earnings per share is also presented in order to give an indication of
the underlying performance of the Group and is calculated as follows:
2005 2004
#'000 #'000
Profit for the financial year 5,299 3,878
Goodwill amortisation 1,883 1,057
7,182 4,935
Adjusted earnings per share
Basic 18.0p 14.2p
Diluted 17.6p 13.6p
5. Reconciliation of movements in group shareholders' funds
2005 2004
#'000 #'000
Profit for the financial year 5,299 3,878
Dividends (2,636) (2,319)
2,663 1,559
New share capital issued 2,933 14,576
Shares to be issued (883) 1,658
Currency translation differences (440) (570)
Employee Benefit Trust 397 (61)
Movement in equity shareholders' funds during the year 4,670 17,162
Equity shareholders' funds at beginning of year 49,731 32,569
Equity shareholders' funds at end of year 54,401 49,731
6. Reconciliation of operating profit to net cash inflow from operating
activities
2005 2004
#'000 #'000
Operating profit 9,697 6,527
Depreciation 3,368 2,613
Loss on sale of fixed assets 96 74
Amortisation of intangible assets 1,883 1,057
Options charge 428 89
Increase in work in progress (4,621) (2,309)
(Increase) decrease in debtors (4,742) 296
Increase (decrease) in creditors 6,647 (583)
Net cash inflow from operating activities 12,756 7,764
7. Reconciliation of net cash flow to movement in net debt
2005 2004
#'000 #'000
(Decrease) increase in cash during the year (1,393) 4,238
Cash outflow (inflow) from decrease (increase) in debt and lease financing 3,722 (2,971)
Change in net debt resulting from cash flows 2,329 1,267
Debt and finance leases assumed on acquisitions (94) (6)
New finance leases (3,468) (3,069)
New loan notes (74) (185)
Currency translation differences 117 -
Movement in net debt during the year (1,190) (1,993)
Net debt at beginning of year (14,232) (12,239)
Net debt at end of year (15,422) (14,232)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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