TIDMWYG
RNS Number : 7420B
WYG Plc
11 June 2019
11 June 2019
WYG plc
("WYG" or "Company")
Unaudited Preliminary 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 GBP157.0m (2018: GBP154.4m); H2 revenue of GBP81.7m (H1: GBP75.3m)
-- Statutory operating loss of GBP3.8m (2018: GBP4.8m); loss
before tax GBP4.6m (2018: GBP5.3m)
-- Adjusted operating profit** GBP1.8m (2018: GBP3.5m)
-- Adjusted profit before tax** GBP1.0 (2018: GBP2.9m)
-- 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 GBP9.3m (30 September 2018:
GBP13.2m, 31 March 2018: GBP6.3m)
-- Order book up 0.2% to GBP166.7m as at 31 March 2019 (31 March 2018: GBP166.4m)
* 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
GBP117.9m (2018: GBP119.3m), reflecting difficult final quarter in
the UK
-- International Development revenues increased to GBP39.1m
(2018: GBP35.1m) as large projects mobilise
-- Actions being taken to improve profitability and efficiency
across the business include:
o a range of self-help measures targeted to generate annual
overhead savings in excess of GBP6.0m in aggregate through
selective headcount reduction, delayering of management and
consolidation of offices
o 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 GBP166.7m, 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."
Contacts:
WYG plc Tel: 0207 250
Douglas McCormick, Chief Executive Officer 7731
MHP Communications Tel: 020 3128
Katie Hunt / Ollie Hoare / Pete Lambie 8100
N+1 Singer Tel: 020 7496
Sandy Fraser / Justin McKeegan/ Amanda Gray 3000
Chairman's statement
Platform for Growth
On 20 May 2019, the boards of Tetra Tech, Inc., Tetra Tech UK
Holdings Limited (Tetra Tech) and WYG announced they had reached
agreement on the terms of a recommended cash offer (Offer) pursuant
to which Tetra Tech would acquire the entire issued and to be
issued share capital of WYG (Acquisition).
The combination of WYG and the Tetra Tech group will bring each
other a number of benefits, which will position the combined group
to further drive growth and value:
-- The combination will represent a premier international
consulting, engineering, and programme management firm, able to
deliver an enhanced value proposition for clients through
differentiated and innovative solutions. WYG will help to diversify
the combined group's operations, further enhancing portfolio
quality and stability.
-- The combined group will have attractive positions in targeted
high growth areas. WYG enhances Tetra Tech's leading positions in
water, environmental, sustainable infrastructure and international
development.
-- WYG's complementary geographic presence will allow for the
combined group to have greater scale globally. In particular, WYG
provides a platform for the combined group in the UK and Europe,
from which together it can accelerate investment in future
growth.
Proposed Terms
Under the terms of the Acquisition, WYG Shareholders will
receive 55 pence in cash for each share held. The Acquisition
values the entire issued and to be issued ordinary share capital of
WYG at approximately GBP43.4 million and represents a premium of
approximately 244 per cent. to the Closing Price of 16 pence per
WYG Share on 17 May 2019 (being the last business day prior to the
announcement of the Offer); 237 per cent. to the Volume Weighted
Average Price per WYG Share during the one month period ended on 19
May 2019 (being the last business day prior to the Announcement
Date); 258 per cent. to the Volume Weighted Average Price per WYG
Share during the three-month period ended on 19 May 2019; and 150
per cent. to the Volume Weighted Average price per WYG Share during
the six-month period ended on 19 May 2019.
The WYG Directors, who have been so advised by N+1 Singer on the
financial terms of the Acquisition, consider the terms of the
Acquisition to be fair and reasonable. In providing advice to the
WYG Directors, N+1 Singer has taken into account the commercial
assessments of the WYG Directors.
Next Steps
Shareholder approval is required for the Offer, which, if
approved, will be effected by means of a Court-sanctioned scheme of
arrangement under Part 26 of the Companies Act (Scheme).
Shareholders will have the opportunity to attend and vote at
required shareholders meetings which will be held on 27 June 2019
to approve the Scheme. The relevant documents and voting forms were
sent to shareholders on 3 June 2019. The WYG Directors unanimously
recommend that shareholders vote in favour of the Scheme and the
associated resolutions to be proposed at the shareholders'
meetings. If the Scheme is approved by shareholders and the Court,
the Scheme is expected to become effective on 9 July 2019. In the
event that the Scheme is not approved, the Directors will seek to
implement the recovery plan described in more detail below,
together with a secondary equity raising to strengthen WYG's
balance sheet.
Strategy
Regardless of the proposed Acquisition, our strategy continues
to be to develop a simpler, more robust platform and drive
efficiencies to enable a return to sustainable and profitable
growth.
Last year, having recognised that our operating margins were low
and that operating cash generation had been weak over a sustained
period, the Board implemented plans to reduce operating costs
substantially and tackle specific areas of underperformance.
Following the announcement on 13 February 2019 that operating
profit for the year ending 31 March 2019 was likely to be
materially below the market expectations at that time and that we
expected to breach our net debt to EBITDA and interest cover
covenant tests, it was clear there was an even more urgent need to
accelerate WYG's plans to restore shareholder value and the Board
instigated a more radical recovery plan.
The first element of the recovery plan was to implement a range
of self-help measures targeted to generate annual overhead savings
in excess of GBP6.0m in aggregate through selective headcount
reduction, delayering of management and consolidation of offices.
This has now largely been achieved. The other elements included the
potential divestment of smaller non-core business units; and a
strategic review of the WYG Group's core operations, including a
reassessment of WYG's business priorities.
The other key element of the recovery plan was to be the
execution of a material secondary equity raise to strengthen WYG's
balance sheet thereby creating the necessary financial flexibility
to allow the Directors to implement the recovery plan from a
position of relative financial and negotiating strength. This
process, which was supported by key shareholders, was close to
being launched when discussions initially commenced with Tetra
Tech. The process has been paused but if for any reason the
Acquisition does not complete, the Board would seek to restart it
immediately.
Bank facility
On 13 February 2019, the Company announced a trading update
stating, among other things, that due to a challenging trading
environment in the final quarter of the financial year, the Board
expected the Company would not meet either of the net debt to
EBITDA or interest cover covenant tests within its bank facility
agreements on 31 March 2019. We opened discussions with the bank to
secure a waiver of the relevant covenant tests and on 18 March 2019
we announced that the bank had confirmed its agreement to waive the
31 March 2019 covenant tests. New covenant tests were subsequently
agreed in principle although they would be dependent on the
secondary equity raising outlined above.
Dividend
In December 2018, an interim dividend for the six months ended
30 September 2018 of 0.6p was declared for payment in April 2019.
However, in the light of the 13 February 2019 trading update, it
was announced on 18 March 2019 that the Board had decided not to
pay the interim dividend, nor will the Board be recommending the
payment of a final dividend for the year ended 31 March 2019.
Accordingly, the overall dividend for the year was GBPnil.
Board changes
On 25 September 2018, David Jeffcoat retired from the Board. On
the same day, Neil Masom became chair of the Audit & Risk
Committee and Marcia Marini became chair of the Remuneration
Committee. On 25 February 2019, Iain Clarkson resigned as Chief
Financial Officer.
Colleagues
Finally, we do not underestimate the personal and professional
challenges associated with a sustained period of difficult trading
conditions and operational restructuring and I would like to thank
the Board and all our employees for their continuing commitment and
hard work.
Jeremy Beeton
Chairman
11 June 2019
Chief Executive's Review
Summary
This has been a challenging year for WYG, culminating in the
requirement to revise market expectations in February and seek a
waiver of the covenant tests in our banking facility agreement.
While revenues have held up well in most areas and we have recently
won a number of substantial new projects in our International
Development business, our Consultancy Services business in the UK
has been impacted by cautious business sentiment and political
uncertainty. As a result, we did not see the marked increase in UK
activity that has been typical of the final quarter of our
financial year in the past. The combination of traditionally lower
margins in the International Development business and the impact of
the deferral of activity on certain projects leading to
overcapacity in our Consultancy Services business meant that
profitability for the year as a whole was approximately half of
what we had originally expected.
Over the past six months we have been implementing a number of
actions to improve profitability and reduce our net debt position
in line with our stated strategy of developing a simpler, more
robust platform and driving efficiencies with a view to returning
to growth in the medium term.
In March 2019, we undertook a further close review of
productivity, property, IT and support services which resulted in
some further targeted headcount reductions to achieve savings of c.
GBP6.0m, the benefit of which will come through in the current
year. We continue to make progress in all of these areas.
The announcement shortly after the year end of a recommended
cash offer by Tetra Tech to acquire WYG presents an entirely
different future roadmap for the Company, its clients and our
employees. Tetra Tech is a global leader in the engineering and
consulting sector with a market capitalisation of $4.0 billion and
has both the financial strength to support investment in people and
systems to deliver WYG's long term growth ambitions, as well as the
operating footprint and technical expertise to open up new market
opportunities for the business. I believe that becoming part of
Tetra Tech will enable us to leverage the benefits of scale and
access to expertise across highly complementary geographies and
client relationships, and will bring operational infrastructure and
financial strength to support WYG's long term growth ambitions.
Results
Including our share of Joint Venture revenues, revenue for the
full year increased by 1.7% to GBP157.0m (2018: GBP154.4m). Revenue
in the second half was GBP81.7m (H1 2019: GBP75.3m). A slight
reduction in Consultancy Services revenue from GBP62.3m to GBP60.1m
in the second half, largely the result of weaker than expected
performance across our UK businesses, was offset by the 11.5%
increase in revenue in the International Development business to
GBP39.1m.
Adjusted(1) operating profit was GBP1.8m (2018: GBP3.5m). This
reduction was caused by the cost of maintaining increased capacity
in certain parts of the business in anticipation of work that did
not materialize and the continuing impact of the departure of staff
from certain parts of the business leading to lower efficiency.
Adjusted profit before tax was GBP1.0m (2018: GBP2.9m) and the
statutory loss before tax was GBP4.6m (2018: GBP5.3m).
The Group closed the year with net debt of GBP9.3m (30 September
2018: GBP13.2m; 31 March 2018: GBP6.3m). This was better than
previously forecast and reflects strong cash collections throughout
the Group.
As at 31 March 2019, the Group's order book was level at
GBP166.7m (31 March 2018: GBP166.4m) This pipeline of work, a
substantial proportion of which is to be undertaken in the first
half of FY2020, gives a sound basis for current year trading.
(1) See Note 3.
Strategy
Within a trading update statement released on 13 February 2019,
the Board announced that it anticipated a second half operating
profit performance below that achieved in the first half, implying
an operating profit for the year as a whole materially below
previous market expectations.
The trading update statement further commented on WYG's
operating performance and financial position as follows:
"We are now seeing a steady improvement in the conversion of our
International Development business's pipeline into profitable work,
with revenues anticipated to be slightly ahead of previous
expectations. However, the business's margins remain lower than
those of our mainly UK focussed Consultancy Services business as we
continue to incur high bidding costs ahead of building revenues. In
Turkey and Africa, we have a good order book of new work to be
delivered in the next 12 months and our wider pipeline of future
prospects continues to build healthily.
However, our UK markets are now being impacted by the current
cautious business sentiment and political uncertainty, meaning that
Consultancy Services is seeing some delays in investment decisions
regarding new work as well as the deferral of activity on certain
existing projects, across both the public and private sectors. As a
result, we think it necessary to take a more cautious view as to
the likely outturn for our UK business for the year such that we no
longer expect to see the marked increase in our UK activity that
has been typical of the final quarter of our financial year in the
past.
As a result, we expect that we will not meet either of the net
debt to EBITDA or interest cover covenants within our facility
agreements for 31 March 2019 and we have opened discussions with
our lending bank with a view to securing a deferral or waiver of
the relevant covenant tests. We already have a number of clearly
defined actions underway in order to materially reduce our net debt
position. Subject to the timing of some larger trading receipts
within our International Development business, we expect year end
net debt to be in line with previous market expectations at around
GBP10.0m."
This statement followed previous announcements by WYG whereby it
announced reduced expectations of operating performance on three
separate occasions due to a combination of factors affecting both
its Consultancy Services and International Development
businesses.
The Board recognised that WYG 's operating margins were low and
that operating cash generation had been weak over a sustained
period and as a result implemented plans to reduce operating costs
substantially and tackle specific areas of underperformance.
However, against the background described above and notwithstanding
the subsequent announcement on 18 March 2019 that WYG's lending
bank had agreed to a waiver of the 31 March 2019 covenant tests
under WYG's facility agreements, the Board identified an urgent
need to accelerate WYG's plans to restore shareholder value as an
independent entity quoted on AIM. The Board's recovery plan
envisaged reconfiguring WYG as a more tightly focused consulting
business with normalised operating margins and a de-risked balance
sheet. The core elements of the plan were as follows:
-- a range of self-help measures targeted to generate annual
overhead savings in excess of GBP6.0m in aggregate through
selective headcount reduction, delayering of management and
consolidation of offices;
-- the potential divestment of smaller non-core business units; and
-- a strategic review of WYG's core operations, including a
reassessment of WYG's business priorities.
The Board's vision was that, following full implementation of
the plan to restore shareholder value, the repositioned WYG Group
would be capable of generating operating margins consistent with
historical sector averages from a lower revenue base, which would
represent a sound platform from which first to restore and
thereafter to build shareholder value.
The Board believes that it would have likely taken up to 18
months for the full benefits of the plan to be reflected within
WYG's operating results, that full implementation of the self-help
measures identified above would carry a significant up-front cash
cost and that it would likely be several months before a sustained
and meaningful reduction in WYG's monthly operating costs was
delivered.
The Board believes that both the costs of implementation of the
recovery plan and the current and expected level of WYG's
indebtedness were too high in the context of the current uncertain
trading environment. Accordingly, a key element of the plan was to
be the execution of a material secondary equity raising to
strengthen WYG's balance sheet, thereby creating the necessary
financial flexibility to allow the directors to implement the
recovery plan from a position of relative financial and negotiating
strength. This process was close to being launched when discussions
initially commenced with Tetra Tech.
In considering whether to recommend the Acquisition, the Board
weighed WYG's future prospects as an independent entity against the
certainty of the immediate cash return under the Acquisition, and
have taken into account, amongst other things, the following
factors:
-- WYG's relative lack of scale and therefore vulnerability to
further near term trading softness within a macro investment
environment with significant uncertainties, particularly generated
by Brexit, and no clear evidence of an imminent return to a more
normal pattern of trading activity;
-- the dilutive impact of a material secondary equity raising,
most likely at a discount to the current share price, on future
equity returns;
-- the execution risk attaching to implementation of the
directors' value recovery plan, recognising the anticipated
timescale of up to 18 months for full implementation of the plan;
and
-- the significant opportunities for WYG in the mid and longer
term through the prospect of inward investment by the UK government
in infrastructure and housing as well as external investment by the
UK government through international development and investment.
The Board's assessment is that the Acquisition terms fairly
reflect WYG's current market position and its future prospects,
taking into account the factors outlined above. Accordingly, the
Board decided that WYG's Shareholders should have the opportunity
to realise their investment in WYG on the terms proposed by Tetra
Tech.
People
With competition for talented employees particularly intense in
our sector we recognise that it is important to provide an
environment in which people can thrive. Unfortunately, given the
financial backdrop to the year we have had to exercise restraint
over salary increases and delay certain other planned investments.
However, we expect that with the improvements we have made in
efficiency and an anticipated return to improved levels of
profitability we will be able to revisit these decisions in the
coming 12 months.
As a Board, we recognise that our people are our most important
asset: it is their enthusiasm, ability and commitment that drive
and deliver our performance. We sincerely appreciate the personal
and professional commitment they've shown throughout the year.
Current trading and outlook
WYG's current trading position is broadly in line with the
trading update of 13 February 2019. However, our net debt balance
at the financial year end was almost GBP1.0m better than the
GBP10.0 million anticipated at the time of the trading update
statement and since then net debt has continued to track ahead of
internal forecasts. Trading to date in line with management's
expectations and the impact of the cost reduction measures and
restructuring described above is beginning to have a positive
impact.
There remains plenty that we can do to build on this platform
and develop our business as the UK government continues to invest
in infrastructure, housing and the defence estate, the prime
drivers of our UK business. The UK's ring-fenced overseas
development budget and the commitment of international financial
institutions to socio-economic and technical development in other
countries present significant new opportunities.
Finally, if approved by shareholders, the Acquisition by Tetra
Tech, will bring substantial opportunities not only diversifying
our operations, creating attractive positions in targeted high
growth areas and the complementary geographic presence but also
bringing investment, innovation and opportunity which will benefit
both our clients and our employees and other stakeholders.
Operational review
Operationally, the Group was structured and reported throughout
the financial year in line with our organisational structure:
-- Consultancy Services - which included all our UK activities
and those parts of our international business which operated in
similar technical services fields and comparable markets, primarily
Poland. 96% of revenues relate to the UK
-- International Development
Consultancy Services (75.1% of Group Revenue)
WYG's Consultancy Services business generated revenues of
GBP117.9m (2018: GBP119.3m) with an operating profit before
separately disclosed items and central overheads of GBP4.4m (2018:
GBP5.4m).
WYG Consultancy Services provides expertise in a broad range of
services across the full lifecycle of projects in property, assets
and infrastructure, which makes us well positioned to take
advantage of growing opportunities in our markets. During FY2019
the business operated as five units: Infrastructure & Built
Environment, Programme & Project Management (P3M), Surveying
& Asset Management, Environmental, and Planning & Transport
with a strong senior team in place to build upon our expertise in
each of these areas.
Immediately following the year end, as part of our plans to
achieve cost savings and drive increased efficiency, we
restructured Consultancy Services so that since 1 April 2019 it has
operated in three divisions: Planning & Advisory Services,
Asset & Project Management and Infrastructure & Built
Environment.
In Infrastructure & Built Environment, our architectural,
engineering and design teams continue to see good opportunities
across all our sectors notably defence, nuclear and highways. We
have continued the development of efficiencies in the digital
environment by focussing on working directly with the tier one
supply chain. For example, our use of Civils 3D on our single
living accommodation project saw us link the model directly to the
earthmoving equipment achieving a cut and fill balance whilst
remodelling over 430,000m(3) material. We have delivered flagship
projects such as the award-winning Birmingham Conservatoire, Hi G
pilot training facility and continued phased development of Fletton
Quays. Our Highways team has been successful in securing a position
on the Midlands and South West Highways England framework which has
a strong opportunity pipeline for the next four years. Our success
in securing both the Multi-Disciplinary Lot 1 on the Crown
Commercial Services framework and the Homes England Framework
provides opportunities for our highways, civil, structural, M&E
and architecture teams. In Rail, we have won a number of new
projects through our First Group framework, as well as feasibility
studies for several major new projects in Poland. In Nuclear, we
continue to support James Fisher Nuclear Ltd (JFN) in its four year
contract with Magnox to undertake decommissioning activities on the
Steam Generating Heavy Water Reactor (SGHWR) at the Winfrith Site,
Dorset. This is the biggest single decommissioning contract outside
of Sellafield for WYG and positions us well for emerging
opportunities in nuclear decommissioning across the UK.
The P3M Business delivered a range of Programme, Project and
Cost Management services in the Social and Economic Infrastructure,
Commercial and Residential Development and Security, Justice and
Defence sectors.
Its international portfolio of work continues to grow supporting
HMG interests through our Principal Support Provider Overseas
contract. This includes a garrison development for the British Army
in Kenya and training facilities in Belize. We are supporting
hurricane disaster recovery programmes for the FCO replacing
Education, Healthcare and Transport Infrastructure for the
Government of Anguilla. We have also won another portfolio of
projects with the FCO Embassy programme in locations such as;
Ottawa, Lagos, Tehran and Maputo.
In the UK, we retained our place on the Homes England framework,
and we are working with the residential development and
regeneration specialist, Sigma Capital Group, on housing programmes
across the North West, Midlands and South East of England. We are
also supporting a range of residential developers such as Bovis,
Crest Nicholson, Taylor Wimpey, Grainger and Persimmon Homes with
value engineering Project and Cost Management advice.
With significant revenue vested with the MoD we delivered a
range of high profile projects under the Lossiemouth Development
Programme, for US Visiting Forces, the Army Basing Programme,
Defence Estates Optimisation, Submarine Programme and other high
security projects. We also continue to diversify our Defence client
base with appointments for QinetiQ, BAE and an infrastructure
support programme to the Multinational Force and Observers in the
Sinai Peninsula, Egypt. Our strong reputation with HMG customers
led to appointments for new clients' estate programmes with HMRC,
Police Constabularies, Nuclear Decommissioning Authority and
security upgrades to the Parliamentary Estate.
During the year we were a Gold Award Winner for our Armed Forces
Covenant and MoD Employer Recognition Scheme. We also achieved
accreditation to the collaborative working standard ISO 44001 for
our enterprise with DIO on the Salisbury Plain Training Area -
Service Family Accommodation programme. We are the first Principal
Support Provider to achieve this status with DIO.
Our Surveying & Asset Management business continues to
develop efficiencies through digitising some of its core service
offering, generating efficiencies and competitive advantage in our
service delivery. In this business we work throughout the asset
cycle, combining our services to provide our clients with
compliance, assurance, data collection and best practice asset
management consultancy through a diverse range of services. Whilst
a significant proportion of our work is within the UK, the team
also operates on several of our clients' global asset portfolios.
Most services flow through repeat work on longstanding framework
relationships with FCO Services, Ministry of Justice, DIO,
Sellafield Ltd, Network Rail, Royal Mail Group, Surrey County
Council and many other local authorities. Significant new
commissions secured this year include projects with Crossrail, HMRC
and Homes England.
Our Environment business has made progress diversifying its
service offering and we have seen a steady growth of expert witness
appointments for planning and public inquiries. In this regard we
recently supported Uttlesford District Council in their approval of
the extension of Stansted Airport. More widely, the majority of our
revenues come from residential and mixed-use development, land
quality and regeneration, infrastructure and increasingly
extractive industries, including through key frameworks with
National Grid, Homes England and DIO.
We have more than 265 staff across our Planning, Transport &
Design Business and as such, are the UK's third largest planning
consultancy. The UK Government's continuing focus on residential
construction means that this is the main part of our work, albeit
our portfolio is still diverse and wide ranging across all private
and public sectors.
Residential markets continue to be the mainstay of our work as
UK policy seeks to meet public demand for new and improved housing
on both greenfield and brownfield sites. We have been successful in
growing our Public Sector and Third Sector opportunities through
national and regional frameworks which also draw together the wider
capabilities from WYG within strongly co-ordinated and customer
focussed project teams. Internationally we continue to provide
Intelligent Transport Systems advice in Kenya and have expanded
this to support partner organisations delivering transport
commissions in Ethiopia and Uganda.
Both our Planning and Transport Planning businesses have had a
challenging year, not only due to economic conditions but also
recruiting campaigns by competitors which targeted our highly
qualified and experienced staff.
International Development (IDB) (24.9% of Group Revenue)
WYG's International Development business generated revenue of
GBP39.1m (2018: GBP35.1m) with an operating profit before
separately disclosed items and central overheads of GBP1.1m (2018:
GBP2.0m).
We generate our revenue from socio-economic, technical and
infrastructure programmes, organised on a sectoral basis. The main
sectors were:
-- Public Financial Management (PFM) & Governance
-- Monitoring, Evaluation & Learning (MEL)
-- Human Resources and Social Development
-- Climate Change & Adaption
-- Infrastructure & Advisory Services
Our focus over 2018/9 was on ensuring the sustainability of the
business. To deliver this we conducted a restructuring of the
International Development business whilst maintaining operational
standards and securing three significant new programmes through
targeted business development.
The result is a business with reduced overheads and a stronger
project pipeline which is now positioned for operating profit
growth.
As part of our plans to mitigate any potential adverse effects
from Brexit and ensure that our capability in European markets is
protected, we operationalised our new legal entity in the
Netherlands, WYG International B.V. The business's senior
leadership is now based in the Netherlands and the B.V. entity has
begun to win and contract new business for EU-based clients.
Over the course of 2018/19 we were very active in securing new
business, including three significant contract awards from European
clients and contracted through WYG International B.V.
-- Economic Resilience Initiative - Infrastructure Technical
Assistance (ERI-ITA): WYG is the Consortium Lead for this EUR23m
four-year contract with the European Investment Bank (EIB) to
implement a flagship multi-region programme of infrastructure
Technical Assistance (TA) to thirteen countries across the Maghreb,
Mashrek, and Western Balkans regions. This is a significant win for
WYG, consolidating our position in the Western Balkans, and
allowing expansion of our services into new markets in the Maghreb
and Mashrek, as we interface with communities of public and private
stakeholders across both regions. The initial EUR23m contract is
subject to a 100% extension up to EUR46m, contingent on
satisfactory performance and demand for complementary and/or
additional services.
-- Western Balkan Infrastructure Framework Infrastructure
Projects Facility (WBIF IPF) 8: WYG is part of a consortium that
secured the eighth phase of the WBIF-IPF, a EUR23m four-year
contract with the EIB on behalf of the Western Balkans Investment
Framework (WBIF) and financed from the General Budget of the
European Union under the instrument for Pre-Accession Assistance
(IPA) II.
Having either led or co-delivered IPFs 1, 2, 3, 4, and 5, this
reaffirmation of EIB's confidence in our ability to deliver
infrastructure TA through the eighth phase of WBIF IPF reflects our
achievements in phases 1-5 in which EUR13.8bn of infrastructure
investments were supported by our TA.
-- In addition to these projects, WYG expanded its Public
Financial Management (PFM) offering to a new geography, securing a
two-year EUR2.3m EU-funded contract to provide Technical Assistance
to the Government of Antigua and Barbuda (GoAB). We will support a
programme of PFM and Revenue Reform which will serve a critical
role as part of GoAB's commitment to place public finances on a
sustainable footing and establish a basis for economic growth.
These new wins more than offset the impact of the expiry of the
IPF 3 and IPF 4 programmes in June and December 2018
respectively.
In Turkey, having borne the costs of an intense period of
bidding activity on top of reduced levels of fee-earning work for
much of the period we finally started to see a return on our
efforts with a series of significant (ie fee value greater than
EUR1m) project wins coming through starting in December 2018. To
date these total over EUR10m of new work.
We believe that the International Development business is well
positioned to deliver growth in the year ahead despite a
challenging and uncertain marketplace. This growth will be driven
by the impact of cost savings already made, revenue streams from
our new programme wins and through-put from a strong business
development pipeline.
We will also continue to focus on diversifying our client base
with a concentration on the DfID and other HMG markets as well as
maintaining our traditionally strong relationships with EuropeAid,
the European Investment Bank, and the World Bank.
While we note that DfID procurement in particular has been
adversely affected by the impact of Brexit preparations in
Whitehall, we are confident that despite the likelihood of
continued disruption and delays, the reforms made in the last year
place us on a robust footing to deliver our projected financial
targets.
Financial Review
Including our share of Joint Venture revenues, revenue for the
full year increased by 1.7% to GBP157.0m (2018: GBP154.4m). Revenue
in the second half was GBP81.7m (H1 2019: GBP75.3m). A slight
reduction in Consultancy Services revenue from GBP62.3m to GBP60.1m
in the second half, largely the result of weaker than expected
performance across our UK businesses, was offset by the 11.5%
increase in revenue in the International Development business to
GBP39.1m.
On a statutory basis, the Group made a loss before tax of
GBP4.6m (2018: GBP5.3m) on pre-Joint-Venture revenues of GBP157.0m
(2018: GBP154.4m).
Adjusted(1) operating profit was GBP1.8m (2018: GBP3.5m)
representing a reduction in adjusted operating margin to 1.1%
(2018: 2.3%). This was caused by the cost of maintaining increased
capacity in certain parts of the business in anticipation of work
that did not materialize, the continuing impact of the departure of
certain staff from our Planning and Transport Planning businesses
leading to lower efficiency. Adjusted profit before tax was GBP1.0m
(2018: GBP2.9m) reflecting the lower level of operating profit and
higher interest charges.
Separately disclosed costs for the year (including share-based
payments and amortisation of acquired intangible assets) were
GBP5.6m (2018: GBP8.3m). This included: costs incurred for the
restructuring plan of GBP4.0m, share option costs of GBP0.4m, the
amortisation of acquired intangible assets of GBP0.5m and other
charges of GBP0.7m.
Fully diluted earnings per share adjusted to exclude separately
disclosed items were 0.8p (2018: 4.4p). On a statutory basis, the
loss per share was 6.7p (2018: 6.9p).
The primary component of finance costs is the charges relating
to our bond and banking facilities. Finance costs increased to
GBP0.8m (2018: GBP0.6m) reflecting the increased use of our
facility with HSBC and the utilisation of advance payment bonds to
mobilise large programmes of international development work.
The Group still has significant losses brought forward in the UK
meaning that it will pay a reduced rate of UK tax for the
foreseeable future. The Corporation Tax charge for the year was
GBP0.3m (2018: credit of GBP0.3m) We also generate profit in many
of our overseas activities, upon which we pay local corporation
tax.
Profit after tax benefitted by GBP1.15m from recognition of
R&D expenditure credits.
The Group closed the year with net debt of GBP9.3m (30 September
2018: GBP13.2m; 31 March 2018: GBP6.3m). Our cash outlays have
included the planned application of GBP1.2m towards legacy issues
(including ongoing commitments on unoccupied offices), acquisition
costs of GBP0.2m, dividend payments of GBP1.3m and c. GBP2.0m cash
costs of restructuring within the Group.
Cash generation and the effective management of working capital
are fundamental to the business and cash conversion is a key
performance target for the senior management team. Our working
capital KPI, on an 'after payments received on account' basis,
improved to 63 days (2018: 74 days) against our KPI target of 76
days.
As at 31 March 2019, the Group's order book was level at
GBP166.7m (31 March 2018: GBP166.4m). This pipeline of work, a
substantial proportion of which is to be undertaken in the first
half of FY20, gives a sound basis for current year
expectations.
(1) See Note 3.
People
As at 31 March 2019, we employed 1,580 employees (2018:
1,641).
Going concern (See also Note 2 to the Unaudited Preliminary
Results)
The Directors have prepared cashflow forecasts for a period of
21 months from the date of this preliminary announcement which show
that the Group will have sufficient funds to continue and therefore
that the going concern basis of preparation is appropriate.
However, a key assumption within these forecasts is the completion
of the Acquisition by, and the availability of funding from, Tetra
Tech.
The Directors are confident that the Acquisition will be
completed, however, should it fail to be approved by Shareholders
at the Court Meeting or not proceed for any other reason the
Company would be obliged to implement a recovery plan, of which the
key elements would be:
-- the potential divestment of smaller non-core business units;
-- a strategic review of the WYG Group's core operations,
including a reassessment of WYG's business priorities
-- a material secondary equity raising to strengthen the WYG
Group's balance sheet, thereby creating the necessary financial
flexibility to allow the directors to implement the recovery plan
from a position of relative financial and negotiating strength.
This process was close to being launched when discussions initially
commenced with Tetra Tech; and
-- the agreement of revised covenants with the Company's lenders.
These material uncertainties, being the successful achievement
of the Acquisition or if the Acquisition is not completed then
successful completion of the recovery plan, may cast doubt on the
Group's ability to continue as a going concern and, therefore that
it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
Nevertheless, after making enquiries, including enquiries with
shareholders, and considering the material uncertainties described
above, the Directors have concluded that the going concern basis is
appropriate. If adoption of the going concern basis was
inappropriate, adjustments, which it is not practicable to
quantify, would be required, including those to write down the
assets to their recoverable value and to provide for any further
liabilities that may arise.
Other Risks and uncertainties
In addition to the risks described under Going Concern above, as
an organisation that contracts directly with the EU, we remain
mindful of the challenges presented by Brexit and the ongoing
uncertainty surrounding its eventual implementation.
In December 2017, we took steps to mitigate the risk of Brexit
by creating a new intermediate holding and management company in
the Netherlands to ensure we remain eligible under the relevant EU
regulations to bid for, secure and deliver work funded from the EU
Budget or EU Development Funds. This company now has a local
presence and management and has continued to win work with major
international finance institutions and our other clients at levels
consistent with historic bid-win rates.
In addition, there are other geo-political uncertainties that
could affect WYG's performance and, as we have seen in each of the
preceding three years, programme deferrals on existing contracts
and delays in the confirmation of new contracts present an ongoing
risk to WYG's expectations of its performance.
Conclusion
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.
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 growth.
Douglas McCormick
Chief Executive Officer
11 June 2019
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2019
2019 2018
Note GBP'000 GBP'000
-------------------------------------- ----- ---------- ----------
Continuing operations
Revenue including share of joint
venture revenues 156,984 154,351
Less share of joint venture revenues (2,558) (1,500)
-------------------------------------- ----- ---------- ----------
Revenue 4 154,426 152,851
Operating expenses (158,413) (157,700)
Share of result of joint ventures 203 88
-------------------------------------- ----- ---------- ----------
Operating loss 3 (3,784) (4,761)
Finance costs (820) (587)
-------------------------------------- ----- ---------- ----------
Loss before tax (4,604) (5,348)
Taxation (324) 336
-------------------------------------- ----- ---------- ----------
Loss for the year, attributable
to the owners of the parent (4,928) (5,012)
-------------------------------------- ----- ---------- ----------
Loss per share 5
Basic (6.7p) (6.9p)
Diluted (6.7p) (6.9p)
-------------------------------------- ----- ---------- ----------
Operating loss for the year includes net costs of GBP5.6m (2018:
GBP8.3m) that are separately disclosed in Note 3.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2019
2019 2018
GBP'000 GBP'000
--------------------------------------- -------- --------
Loss for the year (4,928) (5,012)
---------------------------------------- -------- --------
Other comprehensive (expense)/income:
Currency translation difference* (443) 390
Other comprehensive (expense)/income
for the year, net of tax (443) 390
---------------------------------------- -------- --------
Total comprehensive loss for the
year (5,371) (4,622)
---------------------------------------- -------- --------
Total comprehensive loss attributable to:
Owners of the parent (5,371) (4,622)
------------------------------------------- -------- -----------
*These items might be reclassified subsequently to the income
statement.
UNAUDITED BALANCE SHEET
As at 31 March 2019
2019 2018
Note GBP'000 GBP'000
--------------------------------- ----- --------- ---------
Non-current assets
Goodwill 18,278 18,193
Other intangible assets 3,125 3,663
Property, plant and equipment 4,471 4,277
Investment in joint ventures 538 737
Deferred tax assets 1,559 1,173
27,971 28,043
--------------------------------- ----- --------- ---------
Current assets
Work in progress 25,113 23,722
Trade and other receivables 34,255 27,697
Current tax assets 95 213
Cash and bank balances 8 4,742 4,750
--------------------------------- ----- --------- ---------
64,205 56,382
--------------------------------- ----- --------- ---------
Current liabilities
Trade and other payables (53,166) (40,512)
Current tax liabilities (455) (304)
Borrowings 8 (9,000) (6,000)
(62,621) (46,816)
--------------------------------- ----- --------- ---------
Net current assets 1,584 9,566
--------------------------------- ----- --------- ---------
Non-current liabilities
Borrowings 8 (5,000) (5,000)
Retirement benefit obligations (1,587) (1,851)
Deferred tax liabilities (1,529) (1,390)
Provisions (2,610) (3,807)
--------------------------------- ----- --------- ---------
(10,726) (12,048)
--------------------------------- ----- --------- ---------
Net assets 18,829 25,561
--------------------------------- ----- --------- ---------
Equity attributable to the
owners of the parent
Share capital 78 78
Translation reserve 1,442 1,885
Retained earnings 17,309 23,598
--------------------------------- ----- --------- ---------
Total equity 18,829 25,561
--------------------------------- ----- --------- ---------
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
For the year ended 31 March 2019
Share Translation Retained Total
capital reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 April
2017 75 1,495 30,004 31,574
Loss for the year - - (5,012) (5,012)
------------------------ ----- ------- -------
Other comprehensive
income:
Currency translation
differences - 390 - 390
Other comprehensive
income for the year - 390 - 390
------------------------ ----- ------- -------
Total comprehensive
income/(loss) for the
year - 390 (5,012) (4,622)
------------------------ ----- ------- -------
Share based payments
credit - - (73) (73)
Issue of share capital 3 - - 3
Purchase of treasury
shares - - (33) (33)
Dividends - - (1,288) (1,288)
------------------------ ----- ------- -------
Balance at 31 March
2018 78 1,885 23,598 25,561
------------------------ ----- ------- -------
Balance as at 1 April
2018 78 1,885 23,598 25,561
Impact of adoption
of IFRS15 2 - - (819) (819)
---------------------- ----- ------- -------
Adjusted balance as
at 1 April 2018 78 1,885 22,779 24,742
---------------------- ----- ------- -------
Loss for the year - - (4,928) (4,928)
---------------------- ----- ------- -------
Other comprehensive
loss:
Currency translation
differences - (443) - (443)
Other comprehensive
loss for the year - (443) - (443)
---------------------- ----- ------- -------
Total comprehensive
loss for the year - (443) (4,928) (5,371)
---------------------- ----- ------- -------
Share based payments
charge - - 330 330
Dividends 6 - - (872) (872)
Balance at 31 March
2019 78 1,442 17,309 18,829
---------------------- ----- ------- -------
UNAUDITED CASH FLOW STATEMENTS
For the year ended 31 March 2019
2019 2018
Note GBP'000 GBP'000
--------------------------------------- ----- -------- --------
Operating activities
Cash generated from operations 7 1,402 1,158
Interest paid (747) (475)
Tax paid (298) (361)
--------------------------------------- ----- -------- --------
Net cash generated from operating
activities 357 322
--------------------------------------- ----- -------- --------
Investing activities
Purchases of property, plant
and equipment (1,681) (2,509)
Purchases of intangible assets
(computer software) (62) (173)
Purchase of subsidiary undertaking,
net of cash acquired (225) -
Settlement of deferred consideration - (230)
Net cash used in investing activities (1,968) (2,912)
--------------------------------------- ----- -------- --------
Financing activities
Proceeds on issue of shares - 3
Purchase of treasury shares - (33)
Dividends 6 (1,308) (1,270)
Drawdown of borrowings 3,000 2,000
Net cash generated from financing
activities 1,692 700
--------------------------------------- ----- -------- --------
Net increase/(decrease) in cash
and cash equivalents 81 (1,890)
Cash and cash equivalents at
beginning of year 4,750 6,518
Effects of foreign exchange
rates on cash and cash equivalents (89) 122
--------------------------------------- ----- -------- --------
Cash and cash equivalents at
end of year 8 4,742 4,750
--------------------------------------- ----- -------- --------
NOTES TO THE UNAUDITED PRELIMINARY RESULTS
1. GENERAL INFORMATION
WYG plc is incorporated and domiciled in England. The address of
its registered office is Arndale Court, Otley Road, Headingley,
Leeds, LS6 2UJ. The company's shares are traded on AIM, a market
operated by the London Stock Exchange plc.
The principal activity of the Group during the period ended 31
March 2019 was that of programme, project management and technical
consultancy. The Group's revenue derives from activities in the UK
and the Group's International division.
2. BASIS OF PREPARATION
These Preliminary Results have been prepared in accordance with
the recognition and measurement principles of International
Financial Reporting Standards ("IFRS") and the IFRS Interpretation
Committee (IFRIC) interpretations as endorsed by the European Union
and therefore is not in full compliance with IFRS. The financial
information set out in these Preliminary Results does not
constitute the Company's statutory accounts for the year ended 31
March 2019 or the year ended 31 March 2018 within the meaning of
the Companies Act 2006. These preliminary results have been
prepared in accordance with the accounting policies set out in the
Annual Report and Financial Statements of WYG plc for the year
ended 31 March 2018 (except as noted below) which will be
consistent with those in the Annual Report and Financial Statements
of WYG plc for the year ended 31 March 2019 when finalised.
Group statutory accounts for the year ended 31 March 2018 have
been delivered to the Registrar of Companies, and those for the
year ended 31 March 2019 will be delivered following the Company's
Annual General Meeting. The audit of the 2019 statutory accounts is
not yet complete. Deloitte LLP have reported on the 2018 accounts.
Their report was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report, and did not contain statements
under section 498(2) or 498(3) of the Companies Act 2006.
Accounting standards and policies
The Group has applied the following revised standards from 1
April 2018:
IFRS 9 Financial instruments.
IFRS 9 Financial instruments has been adopted. There was no
quantitative impact on the Group upon adoption.
IFRS15 - Revenue from contracts with customers.
IFRS 15 Revenue from contracts with customers has been adopted.
No material changes were identified in the way that revenue on
contracts with customers was recognised. Historically, certain
pre-contract costs on bids in relation to international projects
were capitalised once it was probable that the contract was
secured. These costs were then amortised over the life of the
contract. At 31 March 2018 this amount totalled GBP0.8m. IFRS15
allows for the capitalisation of these costs only if they are
incremental and are expected to be recovered. The costs previously
capitalised do not meet these requirements and hence an adjustment
has been made to derecognise these assets from the balance
sheet.
IFRS15 has been adopted through the 'modified retrospective
adoption' approach and as such a cumulative catch up adjustment of
GBP0.8m has been booked to equity at 1 April 2018 without altering
comparatives.
Except for the above, the accounting policies applied are
consistent with those of the annual financial statements for the
year ended 31 March 2018, as described in those annual financial
statements.
Going concern
The Preliminary results have been prepared on the going concern
basis, which assumes that the Group will continue in operational
existence for the foreseeable future.
On 20 May 2019 the boards of Tetra Tech UK Holdings Limited
("Tetra Tech") and WYG plc announced that they had reached
agreement on the terms of a recommended all cash offer to be made
by Tetra Tech (a wholly-owned subsidiary of Tetra Tech, Inc.) for
the entire issued and to be issued ordinary share capital of WYG
plc ("Acquisition").
2. BASIS OF PREPARATION CONTINUED
The Acquisition is currently expected to become Effective in
July 2019, subject to the satisfaction of certain conditions and
further terms set out in Appendix I of the Recommended Cash Offer
from Tetra Tech.
It is intended that the Acquisition be implemented by way of a
Court-sanctioned scheme of arrangement under Part 26 of the
Companies Act (or, if Tetra Tech so elects and with the consent of
the Takeover Panel, a Takeover Offer). The purpose of the Scheme is
to provide for Tetra Tech to become the owner of the entire issued
and to be issued ordinary share capital of WYG. The Scheme will
require, among other things, the approval of Scheme Shareholders
and the sanction of the Court. In order to become effective, the
Scheme must be approved by a majority in number of the WYG
Shareholders voting at the Court Meeting, either in person or by
proxy, representing at least 75 per cent. in value of the Scheme
Shares voted.
The Directors have prepared cashflow forecasts for a period of
21 months from the date of this preliminary announcement which show
that the Group will have sufficient funds to continue and therefore
that the going concern basis of preparation is appropriate.
However, a key assumption within these forecasts is the completion
of the Acquisition and the availability of financial funding from
Tetra Tech.
The Directors are confident that the Acquisition will be
completed, however, should it fail to be approved by Shareholders
at the Court Meeting or not proceed for any other reason the
Company would be obliged to implement a recovery plan, of which the
key elements would be:
-- the potential divestment of smaller non-core business units;
-- a strategic review of the WYG Group's core operations,
including a reassessment of WYG's business priorities
-- a material secondary equity raising to strengthen the WYG
Group's balance sheet, thereby creating the necessary financial
flexibility to allow the directors to implement the recovery plan
from a position of relative financial and negotiating strength.
This process was close to being launched when discussions initially
commenced with Tetra Tech; and
-- the agreement of revised covenants with the Company's lenders.
These material uncertainties, being the successful achievement
of the Acquisition or if the Acquisition is not completed then
successful completion of the recovery plan, may cast doubt on the
entity's ability to continue as a going concern and, therefore that
it may be unable to realize its assets and discharge its
liabilities in the normal course of business.
Nevertheless, after making enquiries, including enquiries with
shareholders, and considering the material uncertainties described
above, the directors have concluded that the going concern basis is
appropriate. If adoption of the going concern basis was
inappropriate, adjustments, which it is not practicable to
quantify, would be required, including those to write down the
assets to their recoverable value and to provide for any further
liabilities that may arise.
3. DETAILED CONSOLIDATED INCOME STATEMENT
Revenue
including
share of Operating Profit/(loss)
joint ventures profit/(loss) before
tax
GBP'000 GBP'000 GBP'000
------------------------------------------ ---------------- ---------------- ----------------
Year ended 31 March 2019
Before separately disclosed
items 156,984 1,801 981
Separately disclosed items - (5,585) (5,585)
------------------------------------------ ---------------- ---------------- ----------------
Total 156,984 (3,784) (4,604)
------------------------------------------ ---------------- ---------------- ----------------
Year ended 31 March 2018
Before separately disclosed
items 154,351 3,506 2,919
Separately disclosed items - (8,267) (8,267)
------------------------------------------ ---------------- ---------------- ----------------
Total 154,351 (4,761) (5,348)
------------------------------------------ ---------------- ---------------- ----------------
Details of separately disclosed items
2019 2018
GBP'000 GBP'000
-------------------------------------------- -------- --------
Share option (costs)/credit (390) 251
Amortisation of acquired intangible assets (527) (1,160)
Impairment of acquired intangible assets - (2,406)
Other charges (4,668) (4,952)
-------------------------------------------- -------- --------
Separately disclosed items (5,585) (8,267)
-------------------------------------------- -------- --------
The Group has incurred a number of material items in the year,
whose significance is sufficient to warrant separate disclosure.
The key elements included within separately disclosed items
are:
-- Annual (charge)/credit in relation to share option costs
-- Annual charge for the amortisation of acquired
intangibles
-- Impairment of acquired intangibles in the prior year related
to the closure of North Associates
-- Items included in other charges in the year are costs
incurred for the restructuring (GBP4.0m), closure costs of North
Associates (GBP0.2m), tax impact of the JV (GBP0.2m) and regulatory
and legal fees (GBP0.3m)
-- The other charges in the prior year relate to legacy claims
relating to non-continuing businesses (GBP2.5m), closure costs of
North Associates (GBP0.8m), bank refinancing fees (GBP0.2m) and
costs incurred for the strategic growth plan net of credits in
relation to deferred acquisition balances (GBP1.5m).
The Directors believe that the operating profit before
separately disclosed items gives a better view of underlying
trading for the Group and enables the user of the accounts to more
accurately understand the Group's performance. Although the share
option costs and amortisation of intangible assets are charges
which occur annually, the Directors excluded those charges from
operating profit before separately disclosed items because their
value is significant and they are not related to the underlying
performance of the business. The other charges in the year are
expected to be one off in nature. Consequently, the Directors
believe it is appropriate to exclude them from operating profit
before separately disclosed items.
4. SEGMENTAL INFORMATION
Business segments
IFRS 8 requires segment reporting to be based on the internal
financial information reported to the chief operating decision
maker. The Group's chief operating decision maker is deemed to be
the executive management team comprising the Chief Executive
Officer and the Chief Financial Officer. Its primary responsibility
is to manage the Group's day to day operations and analyse trading
performance.
The business is organised to focus on the strengths of our
consultancy services and international development business. The
Group's segments are detailed below and are those segments reported
in the Group's management accounts used by the executive management
team as the primary means for analysing trading performance. The
Executive management team assesses profit performance using
operating profit measured on a basis consistent with the disclosure
in the Group accounts.
The Group's operations are now managed and reported by key
technical segments as follows:
-- Consultancy Services (includes UK and CEE; 96% of revenues relate to the UK)
-- International Development
The segment results for the year ended 31 March 2019 are as
follows:
Consultancy International
Services Development Group
2019 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------------- ------------- ------------- -------
Revenues including share of joint
venture revenues 117,850 39,134 156,984
Less share of joint venture revenues (2,558) - (2,558)
-------------------------------------- ------------- ------------- -------
115,292 39,134 154,426
Result
Operating profit before central
overheads and separately disclosed
items 4,370 1,072 5,442
Central overheads (3,641)
-------------------------------------- ------------- ------------- -------
Operating profit before separately
disclosed items 1,801
Separately disclosed items (Note
3) (5,585)
Operating loss (3,784)
Finance costs (820)
-------------------------------------- ------------- ------------- -------
Loss before tax (4,604)
Tax (324)
-------------------------------------- ------------- ------------- -------
Loss for the period (4,928)
-------------------------------------- ------------- ------------- -------
4. SEGMENTAL INFORMATION CONTINUED
Consultancy International
Services Development Group
2018 2018 2018
GBP'000 GBP'000 GBP'000
----------------------------------- ------------ -------------- --------
Revenues including share
of joint venture revenues 119,264 35,087 154,351
Less share of joint venture
revenues (1,500) - (1,500)
------------------------------------ ------------ -------------- --------
117,764 35,087 152,851
Result
Operating profit before
central overheads and separately
disclosed items 5,441 2,015 7,456
Central overheads (3,950)
------------------------------------ ------------ -------------- --------
Operating profit before
separately disclosed items 3,506
Separately disclosed items
(Note 3) (8,267)
Operating loss (4,761)
Finance costs (587)
------------------------------------ ------------ -------------- --------
Loss before tax (5,348)
Tax 336
------------------------------------ ------------ -------------- --------
Loss for the period (5,012)
------------------------------------ ------------ -------------- --------
5. (LOSS)/EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is based
on the following data:
2019 2018
GBP'000 GBP'000
--------------------------------------------- -------- --------
Loss for the purposes of basic and diluted
earnings per share being profit for the
year attributable to the owners (4,928) (5,012)
Adjustment relating to separately disclosed
items (see note 3) 5,585 8,267
Tax impact of separately disclosed items (47) (10)
--------------------------------------------- -------- --------
Earnings for the purposes of basic and
diluted adjusted earnings per share 610 3,245
--------------------------------------------- -------- --------
2019 2018
Number Number
--------------------------------------- ----------- -----------
Number of shares
Weighted average number of shares for
basic and diluted earnings per share 73,180,331 72,729,665
Loss per share
Basic (6.7p) (6.9p)
Diluted (6.7p) (6.9p)
--------------------------------------- ----------- -----------
Adjusted earnings per share
Basic 0.8p 4.5p
Diluted 0.8p 4.4p
--------------------------------------- ----------- -----------
The adjusted earnings per share is calculated after excluding
separately disclosed items. In the opinion of the Directors, this
more accurately reflects the underlying performance of the
Group.
The number of shares used for the calculation of diluted
adjusted earnings per share has been increased by 1,069,264 (2018:
1,049,173) to reflect the impact of dilutive share options.
Share options that could potentially dilute basic earnings per
share in the future were not included in the calculation of diluted
earnings per share because they are anti-dilutive.
6. DIVIDENDS
The interim dividend of 0.6p per share for the period ended 31
March 2018 was paid in April 2018. The final dividend of 1.2p per
share for the year ended 31 March 2018 (2017: 1.2p per share) was
paid in September 2018. On 18 March 2019 the directors announced
the cancellation of the interim dividend which was approved on 4
December 2018 (2018: 0.6p). The amount recognised during the year
was GBP872,000 (2018: GBP1,285,000). The Directors have not
proposed a final dividend for the year ended 31 March 2019.
7. CASH GENERATED FROM OPERATIONS
2019 2018
GBP'000 GBP'000
----------------------------------------- -------- --------
Loss from operations (3,784) (4,761)
Adjustments for:
Depreciation of property, plant
and equipment 1,471 1,331
Amortisation and impairment of
intangible assets 740 3,831
Loss on disposal of property,
plant and equipment 5 100
Share options charge/(credit) 390 (251)
----------------------------------------- -------- --------
Operating cash flows before movements
in working capital (1,178) 250
(Increase)/decrease in work in
progress (1,629) 6,822
(Increase)/decrease in receivables (6,783) 2,927
Increase/(decrease) in payables 11,811 (8,841)
Adoption of IFRS 15 (819) -
----------------------------------------- -------- --------
Cash generated from operations 1,402 1,158
----------------------------------------- -------- --------
8. ANALYSIS OF CHANGES IN NET DEBT
At Other At
1 April Cash non-cash 31 March
Group 2018 Flows Items 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- -------- --------- ---------
Cash and cash equivalents 4,750 81 (89) 4,742
Bank loans and overdrafts (11,000) (3,000) - (14,000)
--------------------------- --------- -------- --------- ---------
Net (debt)/cash (6,250) (2,919) (89) (9,258)
Cash in restricted access
accounts (1,296) 204 25 (1,067)
--------------------------- --------- -------- --------- ---------
Unrestricted debt (7,546) (2,715) (64) (10,325)
--------------------------- --------- -------- --------- ---------
Restricted cash relates to restricted access accounts in WYG
International BV. Other non-cash movements represent currency
exchange differences.
9. POST BALANCE SHEET EVENT
On 20 May 2019 the boards of Tetra Tech UK Holdings Limited
("Tetra Tech") and WYG plc announced that they had reached
agreement on the terms of a recommended all cash offer to be made
by Tetra Tech (a wholly-owned subsidiary of Tetra Tech, Inc.) for
the entire issued and to be issued ordinary share capital of WYG
plc.
ENDS
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FMMRTMBMBBJL
(END) Dow Jones Newswires
June 11, 2019 02:00 ET (06:00 GMT)
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