1st Mar 2005 07:01
White Young Green PLC1 March 2005 Immediate Release 1 March 2005 WHITE YOUNG GREEN PLC Interim Results Announcement for the six months ended 31 December 2004 White Young Green Plc, consultant to the built, natural and social environment,announces its Interim Results for the six months ended 31 December 2004. Financial Highlights • 64% increase in turnover to £65.83m (2003: £40.14m) • 44% increase in profit before tax and goodwill amortisation to £4.21m (2003: £2.93m) • 11% increase in adjusted earnings per share to 7.8p (2003: 7.0p) • 9% increase in dividend per share to 2.4p (203: 2.2p) • Reduction in working capital days to 88 (2003: 124) Operational Highlights • 52% increase in net order book to £220m (2003: £145m) • 13% underlying organic growth in the period • 2 acquisitions completed in February 2005 • New framework contracts with a net fee value of £35m confirmed • 60% of estimated net turnover for 2006 already secured • Additional non-executive director appointed • International business infrastructure established • Major project wins announced for English Partnerships, Network Rail, BNFL and the Office of Government Commerce Chairman Peter Wood said: "We approach the second half of the financial year in a confident frame of mindwith the order book at a record level, a platform for future internationalgrowth established and the cross selling of complementary skill sets beginningto reap significant reward. Trading remains in line with expectations and weremain positive and confident about our future. " For further information, please contact: John Purvis, Chief ExecutiveWHITE YOUNG GREEN PLC Tel: 0113 278 7111 Tim Anderson / Rebecca Skye DietrichBUCHANAN COMMUNICATIONS Tel: 020 7466 5000 CHAIRMAN'S STATEMENT SUMMARY Having recently accepted the Chairmanship of White Young Green Plc (WYG) I amdelighted to report an excellent set of results for the six months to 31stDecember, 2004. These results reflect an increased momentum in both turnover andprofit growth achieved as a result of double digit organic growth and ademonstrably successful acquisition strategy which together have delivered a 50%increase in operating profit before goodwill amortisation to £5.0m (2003:£3.3m). The acquisitions completed in the second half of the last financial year havecontributed strongly to this result, in line with our expectations, and theirintegration is progressing well. IMC Consulting, in particular, has securedcontracts with a net fee value in excess of £20m since joining WYG whichunderpins its workload requirements for both the current year and much of 2006. In addition, an underlying organic growth rate of 13% has been achieved acrossthe Group which is extremely important in a people business where personalmotivation, commitment and ambition are key drivers in delivering enhancedperformance. This has been given additional focus in the period by the roll outof the WYG Business Excellence Model which empowers all staff to share in theownership of the WYG business ethos. RESULTS Profit before tax and goodwill amortisation increased by 44% to £4.2m (2003:£2.9m) and profit before tax was 32% higher at £3.3m (2003: £2.5m). Overall turnover grew by 64% to £65.8m (2003: £40.1m). Included in this turnoverare transactions attributable to third parties, on which the Group does not makea margin, of £11.4m (2003: £4.4m). This increased in the period as a consequenceof the acquisition of IMC Consulting in June 2004 which utilises a diverse rangeof strategic partners in the delivery of its services. Turnover attributable to in-house services increased by 52% to £54.4m (2003:£35.7m). If the acquisitions secured in the period between January 2004 and June2004 are excluded then the underlying organic growth in both net turnover andprofit before tax and goodwill amortisation is 13%. Operating profit margin on in-house services remained very close to thatachieved last year at 9.2% (2003: 9.3%) despite the additional cost ofacquisition integration carried in the period. WYG continues to generate strongoperating margins which compare extremely favourably with other professionalconsultancies in the sector peer group. Earnings per share before goodwill amortisation increased by 11% to 7.8p (2003:7.0p) whilst basic earnings per share fell to 5.4p (2003: 5.6p) as a consequenceof the increased goodwill charge following the acquisitions made last year. Theaverage number of shares in issue increased by 28% following the successfulshare placing and open offer in January 2004 and the issuing of shares insatisfaction of deferred consideration due for previous acquisitions. The balance sheet remains strong and further improvements in working capitalmanagement continue to be a priority for WYG. Overall working capital daysreduced markedly in the period to 88 days (2003: 124 days) due, in part, to theadvance payments enjoyed by IMC Consulting. Discounting those advance payments,the underlying combined work in progress and debtor days of the UK and Irelandbusiness also fell to 116 days (2003: 124 days) whilst gearing, defined as totalGroup borrowings divided by total net assets, came down to 35% (2003: 40%). DIVIDEND The interim dividend is being increased by 9% to 2.4p (2003: 2.2p). This will bepaid on 5th May, 2005, to shareholders on the register at 18th March, 2005. REVIEW OF OPERATIONS WYG has enjoyed another six months of successful trading with the volume of neworders secured in the period, the committed long term order book and thevisibility of future pipeline projects all at record levels. Operationalhighlights in the period include the following: • 52% increase in net order book to £220m (2003: £145m) • 71% increase in net fee value of new orders to £69.5m (2003: £40.7m) • 28% excess of net fee value of new orders over net turnover • 60% of estimated net turnover for 2006 already secured • New framework contracts with a total net fee value of over £35m secured • International business infrastructure established All of the acquisitions completed in the second half of 2004 have integratedwell. Four of the five have already co-located with existing WYG business units.Contracts have, where necessary, been novated to WYG and all key clients of theacquired businesses have been retained post acquisition. Rebranding will becomplete by the end of June 2005 when IMC Consulting will change its name to WYGInternational. Installation of WYG financial management systems is substantiallycomplete and all of the acquired offices comply with standard WYG monitoring andreporting protocols. Most importantly, this has been achieved without anydiminution in either the work winning performance of the acquired businesses orin the rate of profit contribution anticipated at the time of acquisition.Initiatives are now underway to release the added value potential of all ofthese acquisitions. The largest acquisition of 2004 was that of IMC Consulting which took WYG to theforefront of social and economic regeneration in emerging countries and those intransition from a command economy to a free market economy. IMC Consulting hastherefore provided WYG with an established and effective platform for futureinternational growth and, since acquisition, has secured new developmentaid-funded contracts with a net fee value of £20.3m in Poland, South Africa,Romania, Kyrgyzstan and the Balkans. In addition, the operating infrastructureand senior management resources of the business have been strengthened to enablethe process of diversification into new territories and the more traditional WYGmarket sectors to begin. In the domestic markets of the UK and Ireland WYG has had further success ingrowing its portfolio of long term framework contracts. These provide clearvisibility of future earnings and enable the Group to establish high levelcollaborative working relationships with both clients and the supply chain at amore strategic level. Framework contracts account for over 50% of overall Groupturnover and the total net fee value of new framework contracts secured in theperiod was in excess of £35m. The following are typical examples: Office of Government Commerce - Property related services 4 years(OGC) BNFL - Civil Maintenance - Multi-skilled regulatory services 5 yearsAuthority Belfast City Council - Cost management services 4 years Metronet - Environmental & geotechnical 4 years services Home Office Prison Services - Multi-skilled professional 5 years services MOD - Defence Estates - Inspection services on RAF sites 3 years Sainsbury - SE & SW England - Town Planning 5 years services It is of particular note that the Office of Government Commerce has awarded WYGa national framework contract for a wide range of property related professionalservices to be made available to all Central Government departments and LocalAuthorities for a period of four years commencing in November 2004. CentralGovernment departments covered by this framework include MoD, DfES, DEFRA andDVLA. The purpose of the framework is to provide property managers with accessto independent multi-disciplinary professional support, advice, assistance,planning and project management services to supplement their in-house teams. An increasingly important requirement of these framework contracts is theability to provide, coordinate and successfully manage an increasingly widerange of complementary professional services. This is entirely consistent withWYG's own corporate development strategy of building an integrated multi-skilledbusiness around the full life cycle of a clients key assets focussing equally onthe planning, implementation and operational phases. As a consequence WYG willincreasingly benefit from the on-going outsourcing of support services to bedelivered under the umbrella of these long term multi-professional frameworkcontracts. There is also an increasing trend for existing WYG clients to recognise and makeuse of the added value at their disposal from the broader range of strategicskills now available to them from within WYG in the delivery of their majorprojects. This is a reflection of the increasing success achieved incross-selling those skills to WYG's key clients. Typical examples of suchprojects secured in the six months to 31st December, 2004, include thefollowing: • Wolverton Park Regeneration, Milton Keynes WYG has been commissioned by English Partnerships to provide a wide range ofprofessional services to enable the development of Wolverton Park. The scheme ispart of Wolverton Regeneration Strategy and is based on the redevelopment ofpart of the former Wolverton Rail Works site, including Grade II listedbuildings, with the whole area being located within the Wolverton conservationarea. The scheme has an estimated total value of £71m and WYG is providing townplanning, environmental, highways, traffic, rail engineering and utilitiesengineering consultancy services. • London Kings Cross Station WYG has been appointed by Network Rail as lead designer for a major strategicupgrading and renewals programme at London Kings Cross Station. The scope ofwork includes new access arrangements, roofing replacement works and improvementprogrammes throughout the station. This major new project will includesignificant input from WYG's rail team, environmentalists and all keyengineering disciplines. • Downe Hospital, Downpatrick WYG is providing cost management and engineering services on this new £38m AcuteHospital Facility located on the site of the existing Downshire Hospital inDownpatrick. The proposed accommodation includes an acute psychiatric unit,accident and emergency facilities, out patient, coronary care and long-staydementia units. Completion is scheduled for early 2008. ACQUISITIONS On 28 February 2005, WYG completed two further important acquisitions for atotal initial cost of £2.63m. The financial details of these acquisitions arecontained in note 4 of the interim financial information. The acquisition of Robert Long Consultancy Limited, with offices in Southampton,Cambridge and Huddersfield, has added the complementary skills of wastemanagement engineering to WYG's portfolio of environmental services. This isparticularly important in the context of recent legislative changes in thisfield as well as the significant international opportunities likely to arise inthis sector in the future. The acquisition of WynThomasGordonLewis Limited, a town planning and urbanregeneration consultancy based in Cardiff, expands WYG's town planningcapability into the Welsh market. It also strengthens WYG's overall capabilityand capacity in the strategically important urban regeneration field. Both acquisitions are consistent with WYG's policy of identifying potentialadded value over and above the basic trading value of each business. They bringcross selling opportunities, access to new markets and enhanced profile and willvery quickly be integrated into WYG's existing operations. DIRECTORS Gareth Cooper retired as Chairman of WYG Plc, and from the Board, at the AnnualGeneral Meeting held on 10 November, 2004, after eleven years continuousservice, first as a non-executive director of Ernest Green Holdings Plc andsubsequently as Chairman of White Young Green Plc. I take this opportunity toadd my thanks to Gareth for his wise counsel and assistance since I joined theBoard and also for his valued service to both companies over the past elevenyears. We all wish him a very happy and healthy retirement. I am delighted to report that Brian Duckworth has agreed to join the Board ofWYG Plc as a non-executive director with effect from 1st April, 2005. Brian hasrecently retired from the board of Severn Trent Plc on which he held thepositions of Managing Director of Severn Trent Water and Chairman of SevernTrent Water International. He is also currently a non-executive director ofRedrow Plc and Avon Rubber Plc. Brian's operational experience within WYG'straditional market sectors, both at home and in the international arena, willbring significant added value to the Company. EMPLOYEES WYG has grown significantly over the past twelve months whilst retaining theessential ethos, character and vision that has driven its corporate developmentover recent years. This could not have been achieved without the belief,commitment and enthusiasm of all of its staff including those who are relativelynew to the business. I therefore take this opportunity to thank all members ofstaff for their exceptional support and professionalism. The last six months has also seen the launch of the 'Fast Forward' campaigndesigned to introduce the WYG Business Excellence Model to all employeesthroughout the Group. The purpose behind this initiative is to encourage allmembers of staff to take personal ownership of the Group's vision, values andcommitment to quality such that they feel empowered to personally contribute tothe achievement of those objectives in their own offices and markets. This hasbeen underpinned by the achievement of 'Investors in People' in officesthroughout the UK during the course of 2004. OUTLOOK WYG approaches the second half of the financial year in a confident frame ofmind. The order book is at record levels, the 2004 acquisitions have beenintegrated and are contributing strongly, a platform has been established forfuture international growth and the cross-selling of our complementary skillsets is beginning to reap significant reward both on major projects and on thegrowing list of long term framework contracts now available to the Group. All ofthis is set against a business ethos that is committed to strong net margins,continuous improvement in working capital management and the careful applicationof risk management principles in all aspects of corporate development, includingcontinuing the diversity of sector commitment and specialist skills developmentthat gives WYG its stability and resilience. Trading is currently in line with expectations and we remain positive andconfident about our future. PETER S WOOD ChairmanWhite Young Green Plc CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the six months ended 31 December 2004 Six months Six months Year ended ended ended 31 December 31 December 30 June 2004 2003 2004 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000----------------------- ------ --------- --------- ---------Turnover 1 65,826 40,142 89,850Operating expenses (61,781) (37,276) (83,323)Group operating profit 1----------------------- ------ --------- --------- ---------- Continuing operations 4,970 3,303 7,584- Goodwill amortisation (925) (437) (1,057)----------------------- ------ --------- --------- ---------Profit before interest 4,045 2,866 6,527Net interest payable (760) (373) (723)----------------------- ------ --------- --------- ---------Profit before tax 3,285 2,493 5,804Tax 2 (1,132) (771) (1,926)----------------------- ------ --------- --------- ---------Profit after tax 2,153 1,722 3,878Dividends (954) (851) (2,319)----------------------- ------ --------- --------- ---------Retained profit for the 1,199 871 1,559period ----------------------- ------ --------- --------- --------- Earnings per share 3Basic 5.4p 5.6p 11.1pDiluted 5.3p 5.5p 10.7p Adjusted earnings per share 3Basic 7.8p 7.0p 14.2pDiluted 7.5p 6.9p 13.6p Dividend per share 2.4p 2.2p 5.9p----------------------- ------ --------- --------- --------- SUMMARISED CONSOLIDATED BALANCE SHEET as at 31 December 2004 As at As at As at 31 December 31 December 30 June 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000-------------------------- --------- --------- ---------Goodwill 33,105 15,199 34,010Tangible assets 8,827 6,079 7,135Work in progress 23,559 14,316 24,030Debtors 34,765 23,539 34,401Creditors (31,462) (13,092) (35,613)-------------------------- --------- --------- --------- 68,794 46,041 63,963-------------------------- --------- --------- ---------Shareholders' funds 51,011 32,790 49,731Net debt 17,783 13,251 14,232-------------------------- --------- --------- --------- 68,794 46,041 63,963-------------------------- --------- --------- --------- RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS for the six months ended 31 December 2004 Six months Six months Year ended ended ended 31 December 31 December 30 June 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000-------------------------- --------- --------- ---------Profit after tax 2,153 1,722 3,878Dividends (954) (851) (2,319)-------------------------- --------- --------- --------- 1,199 871 1,559New share capital issued, net of 110 761 14,576expensesShares to be issued (134) (753) 1,658Currency translation differences (75) (523) (570)Employee Benefit Trust 180 (135) (61)-------------------------- --------- --------- ---------Movement in equity shareholders'funds duringthe period 1,280 221 17,162Equity shareholders' funds at 49,731 32,569 32,569beginning of period --------- --------- -----------------------------------Equity shareholders' funds at end of 51,011 32,790 49,731period --------- --------- ----------------------------------- SUMMARISED CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31 December 2004 Six months Six months Year ended ended ended 31 December 31 December 30 June 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000-------------------------- --------- --------- ---------Net cash flow from operatingactivitiesOperating profit 4,045 2,866 6,527Depreciation and amortisation 2,593 1,694 3,759Net movement in working capital (3,352) (1,992) (2,596)-------------------------- --------- --------- --------- 3,286 2,568 7,690Returns on investments and servicing (736) (387) (732)of financeTax paid (1,223) (874) (1,653)Net capital expenditure and financial (1,139) 145 70investmentAcquisitions (207) - (11,125)Equity dividends paid (1,468) (1,045) (1,895)FinancingIssue of shares 51 8 8,912(Decrease) increase in debt (2,191) (1,687) 2,971-------------------------- --------- --------- ---------(Decrease) increase in cash during (3,627) (1,272) 4,238the period -------------------------- --------- --------- ---------Reconciliation to net debt(Decrease) increase in cash during (3,627) (1,272) 4,238the periodIncrease (decrease) in debt and lease 76 260 (6,231)financing -------------------------- --------- --------- ---------Movement in net debt during the (3,551) (1,012) (1,993)periodNet debt at beginning of period (14,232) (12,239) (12,239)-------------------------- --------- --------- ---------Net debt at end of period (17,783) (13,251) (14,232)-------------------------- --------- --------- --------- ANALYSIS OF NET DEBT Other At At non 31 1 July Cash cash December 2004 flows items 2004 £'000 £'000 £'000 £'000---------------------- -------- -------- -------- ---------Cash and bank balances 4,501 (3,627) - 874Debt due within one year (1,762) (7,491) (74) (9,327)Debt due after one year (12,011) 8,365 - (3,646)Finance leases and hire purchase (4,960) 1,317 (2,041) (5,684)contracts ---------------------- -------- -------- -------- --------- Total (14,232) (1,436) (2,115) (17,783)---------------------- -------- -------- -------- --------- NOTES TO THE INTERIM FINANCIAL INFORMATION 1. WYG is an international business providing consultancy services to thebuilt, natural and social environment. 2. The tax charge for the six months ended 31 December 2004 has been calculatedat 34%, the estimated effective tax rate for the year ended 30 June 2005. 3. Adjusted earnings per share is calculated after adding back goodwillamortisation of £0.93m (2003: £0.44m), giving adjusted earnings of £3.08m (2003:£2.16m) which are divided by the average number of shares in issue during theperiod ranking for dividend of 39,707,534 (2003: 31,021,286). Earnings per share is calculated on the profit after tax of £2.15m (2003:£1.72m) and the average number of shares in issue disclosed above. Diluted earnings per share is calculated by taking the earnings as disclosedabove and the average number of shares that would be issued on the full exerciseof outstanding share options and the issue of shares in respect of deferredconsideration of 40,874,380 (2003: 31,168,089). 4. On 28 February 2005 the Group acquired the entire issued share capital ofRobert Long Consultancy Limited. The initial consideration was £1.85m comprising£0.74m in cash and 396,288 shares in White Young Green Plc at a market value of£2.801. Further consideration of up to £0.4m is payable if certain performancetargets are met. The additional consideration will be paid in either shares orcash at the option of the Group. On 28 February 2005 the Group also acquired the entire issued share capital ofWynThomasGordonLewis Limited. The initial consideration was £0.78m comprising£0.35m in cash and 153,517 shares in White Young Green Plc at a market value of£2.801. Further consideration of up to £0.6m is payable if certain performancetargets are met. The additional consideration will be paid in either shares orcash at the option of the Group. 5. The interim financial information is prepared on the basis of the accountingpolicies set out in the accounts for the year ended 30 June 2004. The interimfinancial information is unaudited. The financial information does notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The financial information relating to the year ended 30 June 2004 isan extract from the latest published accounts which have been delivered to theRegistrar of Companies; the report of the auditors on these accounts wasunqualified. 6. The interim report will be posted to shareholders on 15 March 2005 andcopies will be available at the Company's registered office at Arndale Court,Headingley, Leeds LS6 2UJ, or on the Company's website www.wyg.com . This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
WYG