WYG sees opportunities in defence estates
Loss-making project management and technical consultancy WYG said trading remains challenging but in line with expectations.
The AIM-listed business, with offices in Liverpool, Manchester, Mold and Cockermouth, published a trading update ahead of its annual general meeting in Leeds on Friday.
Mike McTighe, chairman, said in the statement: "There are some encouraging signs regarding activity levels but these remain relatively modest and markets in the UK generally remain subdued and highly competitive. We continue to expect these subdued conditions to be offset by increased activity in specific areas of UK public spending where we have a strong historical position. For example, we have started work in support of the Defence Infrastructure Organisation on two of the MOD's largest estate programmes, including Germany Rebasing, details of which were announced by Dr Liam Fox to the House of Commons in July, and the procurement of the Next Generation Estates Contracts."
WYG reported a loss of £28.65m in the year to April 2011 on revenue of £121.49m. In June it raised £30m through a placing of new shares on the stock exchange.
McTighe continued: "We are also seeing a number of major development projects come back on line, which were put on hold in 2010 during the Strategic Defence and Security Review, and increasing activity under the framework agreement we have with the Ministry of Justice.
"We continue to exploit a strong pipeline of international opportunities and believe that the prospects for international growth around a five city strategy (namely Warsaw, Ankara, Moscow, Abu Dhabi and Shanghai) remain good. For instance, we have recently been awarded a contract with a Polish Government agency, which is expected to deliver fees in excess of €10 million over three years, to provide consultancy and training services to companies right across Poland in a drive to help them overcome the negative effects of the economic slowdown.
"The recent placing has enabled us to take the steps necessary to create a positive growth environment within the company. As announced at the time of the placing, we have introduced new incentive arrangements to retain and recruit key staff and we are also seeking to recruit new employees to key positions to address market opportunities both in the UK, particularly in the South East, and also overseas to strengthen our global footprint. We are seeing an increase in the quality and number of applications for new positions.
"We are encouraged by the progress being made in reducing the significant legacy costs relating to historical issues arising from the poor professional indemnity insurance history and the sub-optimal property portfolio from which WYG operates in the UK and Ireland. Progress in reducing these costs is slightly ahead of our expectations.
"We are maintaining a rigorous focus on cash management and the group's cash position remains in line with the board's expectations at the time of the placing.
"With a significantly improved balance sheet, a well-incentivised senior team and trading as anticipated, the board believes that the company is now well positioned to take advantage of growth opportunities."
Shares in the company were unchanged at 55p.
