Shearwater Regulatory News (SWG)

10 Mar 2009 07:00



Scott Wilson Group plc Interim Management Statement

Scott Wilson Group PLC ("Scott Wilson" or "the Group"), the multi-disciplinary international design and engineering consultancy for the built and natural environments, today releases its Interim Management Statement for the period from 12 December 2008 to date.

Current trading

The period under review has seen a rapidly deteriorating global economic environment during which the Group continued to address current market conditions and to restructure its organisation to match resources with its anticipated workload. 

The Group's road and rail businesses in the UK, together with the majority of its International operations, particularly in China, India and Eastern Europe, continue to see high levels of demand, reflecting the benefits of its diversified business model. 

At the time of the Group's interim results announcement on 12 December 2008, the Board indicated that Scott Wilson continued to make strong progress, despite the uncertain economic conditions, tangibly demonstrated by the strength of its order book. Since then the order book has continued to grow and now stands at record levels reflecting the Group's success in securing commissions in many markets around the world.

However, more recently, certain market sectors in the UK and the Middle East have seen the deferral of client commitments to pipeline projects and, in a few cases, the postponement or curtailment of existing work-in-progress. This has caused disruption to short-term resource planning and an adverse impact on staff utilisation.

As a result, underlying operating profits for the year ending 3 May 2009 (before the exceptional charge noted below) are expected to be broadly in line with the previous financial year.

Looking beyond the current financial year, market conditions make it difficult to predict performance with any precise degree of certainty. At present, our internal plans are based upon revenue levels close to this year's expected outturn.

Cost reduction initiatives and exceptional charge

As highlighted in the interim results statement, management have implemented a number of measures across the Group with a view to increasing efficiency and preserving cash.

To this end, employee numbers have already been reduced and further programmes are currently underway which in total will result in a 10% reduction in our global workforce, whilst salaries for remaining UK staff will be frozen. Five smaller offices in the UK have been closed and where appropriate office space in major hub cities is being consolidated. Aggregate annual cost savings from these initiatives are expected to be in the order of £20 million.

As a result of the current credit squeeze on many of the Group's clients, the Board has also undertaken a reassessment of work-in-progress and debtor balances resulting in a combination of a precautionary increase in the overall level of provisioning against the debtor book and charges against specific contracts.

The total cost of streamlining the resource base, together with the provisions against work-in-progress and debtor balances, will result in an exceptional charge of £4-6 million in the current financial year. 

Group borrowings/facility

The Group's net debt at the end of February was £29.5m against committed banking facilities of £70 million, repayable in April 2011. Based on the current trading outlook, the Board is confident that the Group has significant headroom in its facilities and is trading well within its financial covenants. 

Prospects

The short-term challenge for the Group is the matching of capacity with its workload. However, the continued strength of the Group's order book and its diversified business model together mean that it remains well positioned to benefit when market conditions stabilise.

~Ends~

Scott Wilson Group plc

Scott Wilson Group plc, with over 6,600 members of staff, is a multi-disciplinary international design and engineering consultancy for the built and natural environments. The Group has doubled in size over the past few years and from its UK headquarters currently controls a worldwide network of 80 offices.

www.scottwilson.com