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News » UK » McCormick tackles WYG inheritance » published 5 Jun 2018

McCormick tackles WYG inheritance

Consulting engineer WYG has posted a pre-tax loss of £5.3m for the year to 31st March 2018.

Chief executive Douglas McCormick Above: Chief executive Douglas McCormick

The loss was due to an increase of £2.5m in provision for contract claims and costs of £3.2m relating to the closure of the North Associates business acquired in October 2015.

North Associates is a real estate consultancy whose core operations are in Cumbria. It has been hit by the deferral of plans for a new nuclear power station at Moorside and so WYG has decided to cut and run.

Closing the loss-making North Associates business is just one of several initiatives set up by chief executive Douglas McCormick, the former Sweett Group chief executive who joined in June to replace Paul Hamer, who left for new job at the helm of Sir Robert McAlpine. Within weeks he uncovered problems and issued a profits warning. [See our previous report here.]

Mr McCormick has also decided to close the Romanian and Bulgarian operations and to flatten the group management structure. An efficiency review is also under way.

Revenue from continuing businesses was up 1.7% at £154.4m (2017: £151.8m).

Excluding the one-off costs, adjusted operating profit was £3.5m (2017: £8.8m) representing a reduction in adjusted operating margin to 2.3% (2017: 5.8%). This was partly caused by losses in the real estate business. Other factors blamed include high staff turnover in the planning and transport planning businesses, delays in volumes on some major frameworks and revised expectations in some engineering projects leading to a reduction in margins.

Chief executive Douglas McCormick said: “Having posted a disappointing set of results at the half year, the team has taken action to start to offset the issues we highlighted in August and November 2017, and there have since been several positive developments ensuring that we met the market's revised expectations of our profit and cash performance.

"We have made good progress implementing our strategy; extended our bank facility with HSBC; and completed a significant step to stabilise WYG's position in light of the potential impact of Brexit.

"Many of the major projects in both of our principal business streams that were delayed in 2017 are now being delivered and our strong order book underpins a significant proportion of FY19's projected earnings. We have a clear strategy in place, a reshaped leadership team and a strong wider group with deep expertise in our chosen markets.  There is plenty of opportunity to build on this robust platform and I believe we are taking the right steps to return to growth in profitability."

 

 

MPU

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This article was published on 5 Jun 2018 (last updated on 5 Jun 2018).

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