WYG Plc – Final Results

WYG plc, the international professional services business, announces its unaudited preliminary results for the year ended 31 March 2019, highlights of which are as follows: 

Financial overview:

• Revenue* up 1.7% at £157.0m (2018: £154.4m); H2 revenue of £81.7m (H1: £75.3m)
• Statutory operating loss of £3.8m (2018: £4.8m); loss before tax £4.6m (2018: £5.3m)
• Adjusted operating profit** £1.8m (2018: £3.5m)
• Adjusted profit before tax** £1.0 (2018: £2.9m)
• Adjusted diluted earnings per share** 0.8p (2018: 4.4p)
• Loss per share 6.7p (2018: 6.9p)
• Net debt as at 31 March 2019 £9.3m (30 September 2018: £13.2m, 31 March 2018: £6.3m)
• Order book up 0.2% to £166.7m as at 31 March 2019 (31 March 2018: £166.4m)

* Including revenue from Joint Ventures
** Adjusted operating profit and adjusted profit before tax are, respectively, statutory operating profit and statutory profit before tax after adding back separately disclosed items as disclosed in Note 3

Acquisition overview:

• Recommended cash offer by Tetra Tech UK Holdings, a wholly owned subsidiary of Tetra Tech, Inc., to acquire WYG for 55p per share announced on 20 May 2019. This represents a 244% premium to the closing price of 16p per WYG share on the day prior to the announcement

Operational overview: 

• Consultancy Services revenue was slightly down 1.2% at £117.9m (2018: £119.3m), reflecting difficult final quarter in the UK
• International Development revenues increased to £39.1m (2018: £35.1m) as large projects mobilise
• Actions being taken to improve profitability and efficiency across the business include:
  –  a range of self-help measures targeted to generate annual overhead savings in excess of £6.0m in aggregate through selective headcount reduction, delayering of management and consolidation of offices
  –  Efficiency review underway, for implementation progressively in FY 19/20 and beyond
• No final dividend payment recommended due to ongoing focus on reducing debt 

Current Trading & Outlook:

• Consultancy Services business stable in most areas and starting to deliver improved results
• International Development opportunities continue with substantial new project wins in Western Balkans and Turkey more than offsetting expiry of IPF 3 and IPF 4 programmes
• At £166.7m, the order book provides a sound basis for current year trading

Douglas McCormick, Chief Executive Officer of WYG plc, commented:

“Although this has been another challenging year for WYG, we have taken decisive steps to implement our strategy of delivering a simpler, more robust platform and driving efficiencies which are beginning to take effect.  We have won or renewed our place on many key frameworks and secured a number of major new projects which will underpin a significant proportion of our projected earnings for FY20 in both our primary business streams.

“On 20 May 2019, it was announced that the Board had reached agreement on the terms of a recommended cash offer by Tetra Tech to acquire the Company at 55p per share, representing a premium of approximately 244% to the closing share price on 17 May. Becoming part of Tetra Tech enables benefits of scale and access to expertise across highly complementary geographies and client relationships, and brings operational infrastructure and financial strength to support WYG’s long term growth ambitions.

“Going forward, whether we become part of the Tetra Tech Group, providing the benefits of scale and access to expertise across highly complementary geographies and client relationships, or with a strengthened balance sheet through the implementation of a fundraising and our recovery plan, we believe WYG is well placed for a return to profitability and positive cash flows.”