WYG made a pre-tax loss of £4.6m in the year to 31st March 2019 on revenue up less than 2% at £157m.
The board has been trying to steady the ship but if shareholders do not vote in favour of selling out when they meet on 27th June, the company will need a secondary equity raising to strengthen the balance sheet.
The need for more funds comes even after a round of office closures and redundancies in March to cut £6m from annual overheads.
Chief executive Douglas McCormick said: “This has been a challenging year for WYG, culminating in the requirement to revise market expectations in February and seek a waiver of the covenant tests in our banking facility agreement. While revenues have held up well in most areas and we have recently won a number of substantial new projects in our International Development business, our Consultancy Services business in the UK has been impacted by cautious business sentiment and political uncertainty. As a result, we did not see the marked increase in UK activity that has been typical of the final quarter of our financial year in the past. The combination of traditionally lower margins in the International Development business and the impact of the deferral of activity on certain projects leading to overcapacity in our Consultancy Services business meant that profitability for the year as a whole was approximately half of what we had originally expected.”
Last month US firm Tetra Tech submitted an offer to WYG shareholders of 55 pence per share, which is more than three times the 16 pence that they were trading at. The offer values WYG at £43.4m.
Mr McCormick said that if shareholders do not back the Tetra Tech offer, cost-cutting actions already taken and the planned equity placement would eventually see the company return to profit. However, he clearly sees takeover as the best option and 72.5% of the shareholding has already indicated that it will vote in support of the takeover.
“The acquisition by Tetra Tech, will bring substantial opportunities not only diversifying our operations, creating attractive positions in targeted high growth areas and the complementary geographic presence but also bringing investment, innovation and opportunity which will benefit both our clients and our employees and other stakeholders,” Mr McCormick said.