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News » UK » New WYG boss uncovers inherited problems » published 25 Aug 2017

New WYG boss uncovers inherited problems

The new chief executive of WYG has uncovered previously unreported problems in the business, prompting him to issue a profits warning to shareholders.

Douglas McCormick Above: Douglas McCormick

Former Sweett Group chief executive Douglas McCormick joined WYG in June to replace Paul Hamer, who left for new job at the helm of Sir Robert McAlpine.

Mr McCormick has swiftly discovered all is not quite as well with WYG as previously advertised.

Revenue for the current year is still expected to top £160m, representing continuing year-on-year growth in line with market expectations. But operating profit for the first half will be significantly lower than last year, the company said.

“Having joined the business at the beginning of June and undertaken a thorough review of the budget and current trading, the board and I consider it appropriate to revise expectations as we are announcing today,” Mr McCormick said. “The impact of the first quarter, largely from slow trading, together with some legacy issues make this both prudent and necessary.”

However, he is confident he can get the business back on track.  “I have visited some 20 of our offices and spoken with several hundred of our staff in my first three months and I am firmly of the view that the underlying business is a sound platform from which to grow in the medium term," he said.

Problems stem from delays in major international contracts starting up, particularly in Turkey, and over optimistic assessments of some consultancy contracts.

The profits warning statement said: “Having undertaken a review of the major contracts within our Consultancy Services business we have concluded that a small number of engineering contracts are likely to deliver lower profitability than originally forecast. This has been further compounded by lower than anticipated volumes under certain framework contracts, though activity on these is now starting to flow through.”

It added: “Due to our Planning and Transport Planning practices performing below expectations in the early months of the year, we now expect operating profit from this core area of activity to be significantly below budget. In addition, the real estate business, which we acquired in October 2015, has also performed well below budget in recent months and we no longer expect this business to achieve its budgeted profit target, although this will also mean that we are likely to pay less deferred consideration than originally projected. Performance in all these business units is expected to show some recovery in the second half.”

 

MPU

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This article was published on 25 Aug 2017 (last updated on 29 Aug 2017).

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