11th Sep 2014 07:46
LONDON (Alliance News) - WYG PLC saw its shares rise early Thursday after it said it had bought Alliance Planning for GBP3.2 million in cash, a deal that will immediately boost earnings, and said its own order book had risen by 10% since the end of March and it is expecting its results to beat market expectations.
It said that it expects revenue in the first half of its financial year, which ends September 30, to be flat on a year earlier, but to accelerate in the second half, and said first-half operating profit will be more than 10% higher than last year. It expects full-year operating profit to be "modestly" ahead of the current market consensus figure of GBP5.25 million.
WYG added that it will seek permissions from shareholders to resume paying dividends, "which reiterates our confidence in WYG's financial position, prospects and profitability".
In a statement, the programme, project management and technical consultancy said it will pay half of the consideration for Alliance Planning when the deal is completed and the other half on the first anniversary of completion. It said the buy will mean it has created one of the largest planning businesses in the UK.
Guildford-based Alliance Planning reported revenue of GBP2.7 million and pretax profit, excluding the remuneration of its owner-directors, of GBP538,614 in the year to end-July, 2013. Its net assets at that date were GBP785,850. Its clients including Frasers Property, Henry Boot, Persimmon Homes, Telereal Trillium and a number of housing associations, city and county councils.
WYG also said its own order book has increased to GBP95.5 million, up 10% from GBP86.8 million at the end of its last financial year on March 31.
"A buoyant UK market is being supplemented by an increasing number of opportunities in Europe following the finalisation of the European budget, enabling funds to be released to the key development agencies responsible for projects in our core markets," it said in a statement.
Key wins so far during the first half of its new financial year include deals with the UK Ministry of Defence, and with the European Investment Bank as part of a consortium.
It said it has also won a GBP28 million security contract in Libya, and is part of a consortium that has been made preferred bidder to support the development of Poland's first nuclear power plant. This would be worth a minimum of GBP6.2 million to WYG, potentially rising to up to GBP35 million over 10 years. Neither of these contracts have been included in the order book because they haven't been finalised.
It said its cash balances will be lower at the end of the first half on September 30 than a year earlier because it is mobilising on a number of large-scale contracts, but expects cash balances to recover in the second half of the financial year.
"Notwithstanding the acquisition of Alliance Planning, we also continue to look at a range of opportunities to invest organically and through selective, niche acquisitions made possible by the group's improving profit and strong cash management," it added.
"In the UK, we have retained or won the overwhelming majority of the key framework agreements that we have bid for, which will sustain a substantial proportion of our expected activity over the next 2 to 3 years. We have also won a number of important new international contracts, significantly improved our order book and pipeline, and further strengthened our business through acquisition and other investments," WYG Chief Executive Paul Hamer said in the statement.
WYG will report its half-year results on December 2.
Its shares were up 5.8% at 117.40 pence early Thursday.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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