25 Feb 2010 07:00
WYG PLC ("WYG" or the "Group")
Interim results for the six months ended 31 December 2009
WYG, the international multi-skilled consultancy, announces its interim results for the six months ended 31 December 2009.
Key Points:
·; Terms of the refinancing, including the conversion of approximately £52.9m of indebtedness into new ordinary and preference shares agreed during the period. Refinancing completed on 8 January 2010 creating a stronger balance sheet with pro forma net assets of £29.2m as at 31 December 2009
·; Three-part strategy being implemented, significant operational restructuring undertaken
·; 20% decrease in revenue to £115.2m (H1 2008: £144.5m)
·; 82% decrease in adjusted profit before tax to £1.6m (H1 2008: £9.0m)*
·; 84% decrease in adjusted earnings per share to 2.0p (H1 2008: 12.8p)*
·; 12% increase in net order book to £290m at 31 December from 30 June 2009 (H1 2008: £364m)
·; Exceptional and other items charge of £6.2m in respect of employee termination costs, refinancing professional fees and amortisation of acquired intangibles (H1 2008: £11.1m)
·; Net debt has increased since 1 July 2009 by £5.6m to £91.0m, broadly similar to last year (H1 2008: £91.5m) after payment of significant exceptional cash costs and before the completion of the refinancing
·; Operational review and cost reduction initiatives underway
Statutory disclosures:
·; Operating profit of £1.3m (H1 2008: £0.9m profit)
·; Loss before tax of £4.6m (H1 2008: loss of £2.1m)
·; Loss per share of 9.6p (H1 2008: loss of 3.8p)
Commenting on the results, Chairman Mike McTighe said: "We have continued to make good progress in our recovery programme during the period. Notably we agreed the terms of our refinancing. Trading conditions were and remain generally challenging but we now have the financial platform on which to develop for the future. Overall our trading during the period has been, and remains, in line with the Board's expectations."
* adjusted business performance excludes the amortisation of acquired intangibles and exceptional costs.
For further information, please contact:
WYG PLC
Paul Hamer, Chief Executive Officer
David Wilton, Group Finance Director Tel: 0113 278 7111
Arbuthnot Securities (Nomad & Broker)
Nick Tulloch/Ed Gay Tel: 0207 012 2100
Financial Dynamics
Jon Simmons, Managing Director Tel: 0207 269 7291
INTRODUCTION
During the six months to 31 December 2009, WYG made significant progress in the implementation of the Group's three-part strategy. In particular, the Group agreed terms for the refinancing of its bank facilities combined with a broader restructuring of the capital structure. These terms were approved by shareholders at the Extraordinary General Meeting on 6 January 2010 and the restructuring was completed on 8 January 2010. Subsequently, the ordinary shares were admitted to trading on AIM.
The restructuring has created a strengthened and more appropriate capital structure as a platform upon which to build a sustainable, strong and resilient business that is better positioned to compete more effectively in the Group's chosen markets.
Overall the Group's performance in the first half of the financial year has been in line with the Board's expectations but it is worth noting that the International Business Unit has traded relatively strongly while the domestic Business Units, namely WYG Engineering, WYG Management Services, WYG Environment Planning Transport and WYG Ireland performed slightly below expectations. While WYG International has a strong and growing order book, the phasing of its expected workload suggests that its performance in the second half of the financial year is likely to be below that in the first half but the longer term trend remains positive.
The Board remains focused on the successful implementation of its three-part strategy and is grateful for the support and commitment shown by its stakeholders and employees during these challenging times. The Group continues to take steps to create a fit for purpose business. This has necessarily involved further restructuring, albeit on a smaller scale than in the financial year ended 30 June 2009. Regrettably, there have been further redundancies across the Group. Good progress has been made in expanding the Group's International operations to create further diversification of its revenue streams and this will be underpinned by the Group's intention to create a business that is totally focused on delivering technical excellence for clients across chosen key sectors.
The progress in implementing the Group's strategy has been made against a backdrop of continuing challenging business conditions, particularly in the Republic of Ireland, but also in the United Kingdom.
RESULTS
In the six months to December 2009, gross revenue reduced by 20% to £115.2m (2008: £144.5m). Net revenue attributable to in-house services (after deducting revenue attributable to third parties on which the Group does not make a margin) decreased by 19% to £100.2m (2008: £123.4m).
Operating profit before exceptional and other items, which include amortisation of acquired intangibles and exceptional items, decreased by 71% to £3.5m (2008: £12.1m). Operating profit margin on net revenue fell to 3.4% (2008: 9.8%) reflecting both the market conditions and the restructuring process. Profit before tax and other items was £1.6m (2008: £9.0m). On a statutory basis the Group made a loss before tax of £4.6m (2008: loss of £2.1m), reflecting the impact of the exceptional and other items in the period.
Following the restructuring and the 10 for one share consolidation, WYG has 35.3m ordinary shares in issue.
Earnings per share adjusted to exclude other items fell by 84% to 2.0p (2008: 12.8p).
Cash used in operations was £0.5m (2008: £3.2m generated).
Net debt at 31 December 2009 increased from £85.3m at 30 June 2009 to £91.0m (2008: £91.5m). As indicated in the latest Annual Report and Accounts, these net debt figures include both cash balances held within the captive insurance company and restricted cash balances held predominantly within the International Business Unit. The net debt at 31 December 2009, excluding these two categories, was £93.7m up from £88.7m at 30 June 2009 (2008: £94.4m). The movement in net debt reflects the cash payment of exceptional costs. There was a relatively modest improvement in cash collection during the period but this was outweighed by the cash outflow principally in respect of exceptional provisions made in the previous financial year and exceptional costs arising during the period including redundancy costs and professional fees. The net effect of this combined with the cash cost of capital expenditure and the payment of interest, was that net debt increased during the period.
The refinancing was completed on 8 January 2010 after the period end. Set out in this report is a pro forma balance sheet to illustrate the balance sheet as at 31 December 2009 if the refinancing had completed on that date. This reflects, inter alia, the conversion of approximately £52.9m of indebtedness into new ordinary and preference shares as set out in the Circular dated 9 December 2009 sent to shareholders.
The Group is acutely focused on cash generation and the more effective management of working capital. Steps taken include recruitment of key individuals, significant investment in a centralised credit control function and the introduction of new policies and procedures. It is anticipated that this focus will lead to the required improvement in this critical business area.
EXCEPTIONAL AND OTHER ITEMS
Once again, the Group incurred significant exceptional costs during the period arising from the refinancing and the restructuring of the Group. These predominantly consisted of professional fees and other costs in connection with the refinancing (£3.9m) and redundancy costs (£1.2m). WYG expects to incur further exceptional costs in the second half of the financial year.
BOARD OF DIRECTORS
As previously announced, David Jeffcoat has been appointed as a Non Executive Director and Chairman of the Audit Committee. John Richardson retired from the Board on 31 January 2010 and once again the Board thanks John for his contribution.
EMPLOYEES
Total Group headcount has been reduced further by 265 between 1 July and 31 December 2009 and as at 31 December 2009 Group headcount was 2,503. It is expected to continue to reduce as the necessary measures are taken to implement the Group's strategy in the face of challenging market conditions. Throughout this difficult period for the business and its people, the commitment and enthusiasm of all staff has been evident, and the Board takes this opportunity to thank them for their continued support. WYG continues to recruit selectively and to invest in the development of its staff who remain, as ever, the Group's most important asset.
OUTLOOK
Current business conditions remain challenging in most of the areas in which WYG operates. While there are some modest signs of recovery, there continues to be a lack of confidence and liquidity and there is uncertainty regarding future public expenditure in the UK. WYG continues to secure new orders particularly outside the UK, but there is, as yet, no evidence of sustained or significant recovery. However, overall the Group's trading remains in line with the Board's expectations.
BUSINESS REVIEW
WYG is structured into five Business Units serving a wide range of private and public sector clients. The five Business Units comprise WYG Engineering; WYG Management Services; WYG Environment Planning Transport; WYG Ireland and WYG International.
In parallel with the Group's refinancing process, the operational business conducted a "root and branch" review across the Group that resulted in swift measures being taken to reduce costs, right size the business to match the changing marketplace and client demand and diversify the Group's global presence by building on its existing international presence. There has also been a strong focus on cash management with new processes and procedures implemented to strengthen the governance environment.
The Group's three-part strategy, adopted in January 2009, is now embedded across WYG and is focused on:
1. creating a more efficient and resilient business that is fit for purpose and delivers shareholder value
2. developing the Group's international business
3. creating a business that is totally focused on delivering technical excellence for clients across chosen key sectors
Like other companies in the sector, the global economic recession has impacted a number of the Group's domestic markets with some projects being cancelled or postponed within the private development, house building and land regeneration industries. WYG expects its domestic markets to remain challenging for the foreseeable future.
Internationally, the Group has made good progress in developing the business by offering a wider range of our services to existing and new clients in the core operating regions of Central and Eastern Europe, the Balkans and the Commonwealth of Independent States. WYG invested to accelerate its growth in the Middle East, Africa and the Gulf and in the six months to 31 December, this approach has started to yield results with the international order book continuing to grow and a number of significant projects secured during the period.
WYG Engineering
The Engineering Business Unit achieved revenue of £28.9m (2008: £44.5m) a decrease of 35%. Operating profit before exceptional and other items was £0.1m (2008: £2.1m), a decrease of 95%.
Compared with the same period last year, the impact of the substantial restructuring of WYG's engineering capabilities is clear, as turnover is down by approximately 40% in Rail, Buildings and Infrastructure.
Market conditions continue to be highly challenging as there is much reduced UK demand and pressure on margins. WYG Engineering has preserved its profitability principally through continuing to serve key clients and strategic partners on major schemes and by securing significant commissions in areas of public sector expenditure, such as hospitals, schools and rail. Overseas revenue growth has also been marked.
WYG Management Services
The Management Services Business Unit achieved revenue of £12.9m (2008: £16.1m) a decrease of 20%. Operating profit before exceptional and other items was £0.6m (2008: £2.1m), a decline of 71%.
The Business Unit continues to generate workload from the UK public sector. Both the Ministry of Defence and Ministry of Justice have extended existing framework agreements while their new procurement models are implemented. Trading in the private sector shows modest signs of improving as the economy begins to emerge from recession. Management Services has retained a foothold with residential development clients and there are initial indications of confidence returning to the housing market.
While risks exist from expected Government spending cuts, reductions in capital and operating expenditure often result in additional consultancy work. Client interaction and confidence has improved markedly following the successful completion of the refinancing.
The management team expects 2010 to remain a challenging year and conversion of future workload is paramount. Order intake figures were some 85% of current turnover and therefore the primary focus is on maximising existing client relationships and developing new business in more robust domestic and international markets. Fee levels remain under pressure as all clients expect to see abatements in existing commitments and more competitive tendering.
WYG Environment Planning Transport (EPT)
The EPT Business Unit achieved revenue of £23.1m (2008: £29.2m) a decrease of 21%. Operating profit before exceptional and other items was £1.2m (2008: £4.0m), a decline of 70%.
WYG Environment Planning Transport traded profitably but below expectations throughout a challenging first half, demonstrating particular resilience in its planning businesses and in the majority of its environmental disciplines. Overall operating performance was determined by the depth of decline in demand for services partially offset by the reduction in headcount and costs in order to match staffing levels to workloads. In planning and transport planning, revenues fell by 19% and 17% respectively, while headcount fell by 16% and 12% respectively. However, demand for environmental services, particularly geo-environmental services, fell more sharply, by 31%, leading to more substantial corrective action being needed. Environmental services has been reorganised for the 2009/2010 year into six distinct disciplines of which four - Waste, Building Compliance, Environmental Planning and Ecology - have experienced reasonable margins.
The market outlook has slightly improved in planning and transport planning services, where earnings are underpinned by resilience of workload from major schemes and the retail industries and the perception that the house-building industry may be starting to recover. A return to the higher levels of utilisation and profitability will be dependent upon further recovery of the development industry as a result of improved confidence in rental and residential values and improved flow of cash to the developers.
The management team expects environmental services to continue to experience mixed conditions and it is expected that the majority of disciplines will enjoy strong demand for services through the rest of this year as a result of the stringent requirements for our services that underpin environmental regulation in the planning system. WYG's geo-environmental services, having been substantially downsized in the last nine months, is now fit for purpose with resources better suited to current workload. WYG EPT is cautiously optimistic that, with gently rising demand for services - notably from long standing clients such as National Grid and WRG - demand for geo-environmental services will increase.
WYG Ireland
WYG Ireland achieved revenue of £17.7m (2008: £29.9m) a decrease of 41%. Operating profit before exceptional and other items was £0.4m (2008: £3.7m), a decline of 89%.
The Republic of Ireland economy saw a severe and rapid decline in 2009 and conditions in Northern Ireland were also difficult. Some modest signs of recovery emerged in the latter part of the year and early 2010 indicating that the worst of the recession may be behind both economies. However economic conditions remain fragile. In the Republic the precise nature and impact of the NAMA (National Assets Management Agency) remains to be seen and in Northern Ireland the political discussions over devolved policing and justice powers, the probability of future public sector cuts and a possible reorganisation are causing uncertainty.
Across Ireland, construction suffered more than any other sector, but in the Republic the contraction has been particularly severe. The sector is expected to shrink to just under half of its size at the peak of the boom before beginning a gradual recovery. The Ernst & Young Economic Eye Winter 2009 Forecast indicates that it is likely to be 2014 before GDP in the region returns to its 2007 peak in real terms.
During the period the Ireland management team took the necessary restructuring steps to ensure the cost base is in line with the current needs of the business and resource levels and capabilities are aligned to present and future anticipated workload. These steps have been taken to ensure the business remains competitive during the recession but is also ready to capitalise on opportunities when the markets recover.
The Ireland Business Unit expects the remainder of 2010 to be challenging. Much effort is being devoted to protecting current client relationships and the primary focus is to secure new work in Ireland and assist the Group's internationalisation plans by deploying key members of the water services and highways team to bid on international opportunities.
While the market will continue to be challenging, there are signs of a modest recovery in some local markets with a number of significant project wins in the period, particularly in healthcare, education and retail.
WYG International
The International Business Unit achieved revenue of £32.5m (2008: £24.8m) an increase of 31%. Operating profit before exceptional and other items was £1.2m (2008: £0.2m), a five-fold increase.
WYG International won a significant number of new contracts and has large volumes of proposals and expressions of interest outstanding. The order book continued to grow in the period with contracts covering a wide range of services both in the socio-economic sector and the technical services sector. The move to the new Group regional structure which sees the International Business Unit operate in five regions - Central and Eastern Europe; Balkans; Commonwealth of Independent States (CIS - Former Soviet Union); Middle East and Africa (MEA) and the Gulf - was implemented on 1 July 2009 and is already producing encouraging results.
Despite many sectors and regions having reported a downturn and reduction in their respective country's GDP, many of WYG International's regional Business Units have adapted to market conditions, seeking new opportunities where traditional activity was once high and driving existing channels to increase work. The global economic crisis has hit many sectors and economies hard, notably Kazakhstan, parts of the Gulf and Turkey. Kazakhstan, with its reliance on minerals and hydrocarbons sectors for exports, has managed to stave off the worst effects with critical fiscal policy and other measures. In other countries, politics played a part in influencing the markets. The fall in oil prices has affected many countries in the Gulf and surrounding regions. However, due to the nature of donor funded work, (donor agencies being the most predominant clients), budgets and programmes have mostly been committed for 2010, with donor funding proving relatively recession proof. Each donor agency will undergo budget reviews to commit to their next cycle of funding. In contrast some regions reported favourable trading conditions, in particular in Poland, where GDP increased on the previous year and remains on course for strong recovery and gains in the future. Each region has experienced varying rates of donor activity, and many have reported higher competition for fewer contracts.
DIVIDEND
As previously reported, no dividend will be paid while the Group's current banking facilities remain outstanding and until the preference shares are redeemed in full.
CHANGE OF YEAR END
The Board has determined that WYG should change its year end from 30 June to 31 March with effect from 31 March 2011 and is in the process of obtaining the necessary consents so to do. The principal reason for this proposed change is to avoid both August and December, which are normally months with relatively low activity levels in the UK due to holiday periods, falling within the same half of the financial year. Accordingly, WYG expects to announce results for the year to 30 June 2010 no later than 31 December 2010, followed by interim results for the six months to 31 December 2010 to be announced no later than 31 March 2011 and then results for the nine month period to 31 March 2011 to be announced no later than 30 September 2011.
RISK MANAGEMENT
WYG operates a risk management process to identify, evaluate and manage risk, to formulate and implement mitigation activities and to increase confidence in the Group's performance. Since the period end the Group has completed its refinancing and now has in place debt, working capital and bonding facilities committed for three years.
Steps have been taken throughout 2009 and will continue to be taken to enhance the risk management process. Specific risk areas which may have an impact on the business include the volatility of key markets, fluctuations in foreign currency, competition, key personnel and litigation. The assessment of these risk areas has not altered materially since 30 June 2009 and they are described in more detail on pages 38 to 39 in the Annual Report and Accounts for the year ended 30 June 2009 and in the Circular sent to shareholders dated 9 December 2009 regarding the refinancing and broader restructuring of the capital structure.
Unaudited consolidated income statement
For the six months ended 31 December 2009
|
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
| ||||
|
|
| Before exceptional and other items | Exceptional and other items | Total | Before exceptional and other items | Exceptional and other items | Total | Total | |
|
| Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Continuing operations |
|
|
|
|
|
|
|
| |
| Revenue | 4 | 115,184 | - | 115,184 | 144,451 | - | 144,451 | 261,629 | |
| Operating expenses |
| (111,662) | (2,253) | (113,915) | (132,383) | (11,135) | (143,518) | (385,283) | |
| Operating profit/(loss) |
| 3,522 | (2,253) | 1,269 | 12,068 | (11,135) | 933 | (123,654) | |
| Finance costs | 5 | (1,886) | (3,936) | (5,822) | (3,027) | - | (3,027) | (5,242) | |
| Profit/(loss) before tax |
| 1,636 | (6,189) | (4,553) | 9,041 | (11,135) | (2,094) | (128,896) | |
| Tax | 7 | (604) | 83 | (521) | (2,386) | 2,526 | 140 | 554 | |
| Profit/(loss) attributable to equity shareholders |
| 1,032 | (6,106) | (5,074) | 6,655 | (8,609) | (1,954) | (128,342) | |
|
|
|
|
|
|
|
|
|
| |
| Earnings per share | 8 |
|
|
|
|
|
|
| |
| Basic |
| 2.0p | (11.6p) | (9.6p) | 12.8p | (16.6p) | (3.8p) | (246.0p) | |
| Diluted |
| 2.0p | (11.6p) | (9.6p) | 12.8p | (16.6p) | (3.8p) | (246.4p) | |
|
|
|
|
|
|
|
|
|
| |
| Dividend per share | 9 |
|
|
|
|
|
|
| |
| Interim/final proposed |
| - | - | - | - | - | - | - | |
| Paid |
| - | - | - | - | - | 6.3p | 6.3p | |
Details of exceptional and other items are given in note 6.
The accompanying notes to the interim results are an integral part of this Consolidated Income Statement.
Unaudited consolidated statement of comprehensive income
For the six months ended 31 December 2009
|
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year to 30 June 2009 |
|
|
| £'000 | £'000 | £'000 |
| Loss for the period attributable to equity shareholders |
| (5,074) | (1,954) | (128,342) |
| Other comprehensive income: |
|
|
|
|
| Net exchange adjustments offset in reserves net of tax |
| 41 | (1,055) | (2,138) |
| Actuarial movements on defined benefit pension scheme |
| - | - | (1,449) |
| Cash flow hedges |
| - | (461) | (493) |
| Tax on items taken directly to equity |
| - | (192) | 214 |
| Other comprehensive income for the period |
| 41 | (1,708) | (3,866) |
| Total comprehensive income for the period |
| (5,033) | (3,662) | (132,208) |
Unaudited consolidated balance sheet
For the six months ended 31 December 2009
|
|
| As at 31 December 2009 | As at 31 December 2008 | As at 30 June 2009 |
|
| Note | £'000 | £'000 | £'000 |
| Non-current assets |
|
|
|
|
| Goodwill | 10 | 44,299 | 123,206 | 43,472 |
| Other intangible assets | 11 | 11,568 | 14,209 | 12,699 |
| Property, plant and equipment | 11 | 14,121 | 16,788 | 13,854 |
| Deferred tax assets |
| 275 | 1,209 | 275 |
| Derivative financial instruments |
| 13 | 45 | 13 |
|
|
| 70,276 | 155,457 | 70,313 |
| Current assets |
|
|
|
|
| Work in progress | 12 | 41,122 | 50,478 | 41,189 |
| Trade and other receivables | 13 | 58,358 | 81,230 | 64,076 |
| Tax recoverable |
| 4,469 | 2,910 | 3,919 |
| Cash and cash equivalents |
| 14,803 | 11,230 | 10,896 |
|
|
| 118,752 | 145,848 | 120,080 |
| Current liabilities |
|
|
|
|
| Trade and other payables |
| (71,768) | (76,234) | (72,399) |
| Current tax liabilities |
| (1,262) | (186) | (704) |
| Financial liabilities | 15 | (6,016) | (5,423) | (7,298) |
|
|
| (79,046) | (81,843) | (80,401) |
| Net current assets |
| 39,706 | 64,005 | 39,679 |
| Non-current liabilities |
|
|
|
|
| Financial liabilities | 15 | (99,756) | (97,330) | (88,946) |
| Retirement benefit obligation |
| (4,001) | (1,679) | (4,126) |
| Deferred tax liabilities |
| (3,589) | (3,796) | (3,586) |
| Provisions, liabilities and other charges | 14 | (24,316) | (4,065) | (30,056) |
|
|
| (131,662) | (106,870) | (126,714) |
| Net (liabilities)/assets |
| (21,680) | 112,592 | (16,722) |
|
|
|
|
|
|
| Shareholders' (deficit)/equity |
|
|
|
|
| Share capital |
| 2,648 | 2,598 | 2,648 |
| Share premium account |
| 22,324 | 22,204 | 22,324 |
| Merger reserve |
| 17,900 | 51,599 | 17,900 |
| Hedging and translation reserve |
| 3,026 | 4,100 | 2,985 |
| Retained earnings |
| (67,578) | 32,091 | (62,579) |
| Total shareholders' (deficit)/equity |
| (21,680) | 112,592 | (16,722) |
Consolidated statement of changes in shareholders' equity
For the six months ended 31 December 2009
|
| Share capital | Share premium | Merger reserve | Hedging and translation reserve | Retained earnings | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Balance as at 1 July 2008 | 2,583 | 21,614 | 51,599 | 5,616 | 38,974 | 120,386 |
| Loss for the period | - | - | - | - | (1,954) | (1,954) |
| Other comprehensive income: |
|
|
|
|
|
|
| Cash flow hedges | - | - | - | (461) | - | (461) |
| Currency translation differences | - | - | - | (1,055) | - | (1,055) |
| Tax on items taken directly to equity | - | - | - | - | (192) | (192) |
| Other comprehensive income for the period | - | - | - | (1,516) | (192) | (1,708) |
| Total comprehensive income for the period | - | - | - | (1,516) | (2,146) | (3,662) |
| Premium on issue of share capital | 15 | 590 | - | - | - | 605 |
| Share based payments | - | - | - | - | (1,486) | (1,486) |
| Dividends | - | - | - | - | (3,251) | (3,251) |
| Balance at 31 December 2008 | 2,598 | 22,204 | 51,599 | 4,100 | 32,091 | 112,592 |
| Balance as at 1 January 2009 | 2,598 | 22,204 | 51,599 | 4,100 | 32,091 | 112,592 |
| Loss for the period | - | - | - | - | (126,388) | (126,388) |
| Other comprehensive income: |
|
|
|
|
|
|
| Cash flow hedges | - | - | - | (32) | - | (32) |
| Currency translation differences | - | - | - | (1,083) | - | (1,083) |
| Actuarial movements on defined benefit pension schemes | - | - | - | - | (1,449) | (1,449) |
| Tax on items taken directly to equity | - | - | - | - | 406 | 406 |
| Other comprehensive income for the period | - | - | - | (1,115) | (1,043) | (2,158) |
| Total comprehensive income for the period | - | - | - | (1,115) | (127,431) | (128,546) |
| Premium on issue of share capital | 50 | 120 | - | - | - | 170 |
| Share based payments | - | - | - | - | (938) | (938) |
| Dividends | - | - | - | - | - | - |
| Transfers | - | - | (33,699) | - | 33,699 | - |
| Balance at 30 June 2009 | 2,648 | 22,324 | 17,900 | 2,985 | (62,579) | (16,722) |
Consolidated statement of changes in shareholders' equity (continued)
For the six months ended 31 December 2009
|
| Share capital | Share premium | Merger reserve | Hedging and translation reserve | Retained earnings | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Balance as at 1 July 2009 | 2,648 | 22,324 | 17,900 | 2,985 | (62,579) | (16,722) |
| Loss for the period | - | - | - | - | (5,074) | (5,074) |
| Other comprehensive income: |
|
|
|
|
|
|
| Currency translation differences | - | - | - | 41 | - | 41 |
| Other comprehensive income for the period | - | - | - | 41 | - | 41 |
| Total comprehensive income for the period | - | - | - | 41 | (5,074) | (5,033) |
| Share based payments | - | - | - | - | 75 | 75 |
| Dividends | - | - | - | - | - | - |
| Balance at 31 December 2009 | 2,648 | 22,324 | 17,900 | 3,026 | (67,578) | (21,680) |
Unaudited consolidated cash flow statement
For the six months ended 31 December 2009
|
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| Note | £'000 | £'000 | £'000 |
| Operating activities |
|
|
|
|
| Cash (used in) / generated from operations | 16 | (544) | 3,200 | 12,454 |
| Interest paid |
| (1,686) | (2,345) | (5,322) |
| Tax paid |
| (510) | (1,027) | (435) |
| Net cash (used in)/generated from operating activities |
| (2,740) | (172) | 6,697 |
|
|
|
|
|
|
| Investing activities |
|
|
|
|
| Proceeds on disposal of property, plant and equipment |
| 26 | 480 | 671 |
| Purchases of property, plant and equipment |
| (1,839) | (3,903) | (6,372) |
| Purchases of businesses in prior years |
| (25) | (3,600) | (7,985) |
| Purchases of intangible assets (computer software) |
| (54) | (565) | (989) |
| Net cash used in investing activities |
| (1,892) | (7,588) | (14,675) |
|
|
|
|
|
|
| Financing activities |
|
|
|
|
| Net proceeds on issue of ordinary share capital |
| - | 605 | 775 |
| Equity dividends paid |
| - | (3,251) | (3,251) |
| Repayment of borrowings |
| - | (240) | (94,341) |
| Draw down of loan facilities |
| 9,981 | 2,034 | 94,605 |
| Repayments of obligations under finance leases |
| (455) | (1,054) | (1,627) |
| Purchase of own shares for Employee Benefit Trust |
| - | (605) | (776) |
| Net cash generated from/(used in) financing activities |
| 9,526 | (2,511) | (4,615) |
|
|
|
|
|
|
| Net increase/(decrease) in cash and cash equivalents |
| 4,894 | (10,271) | (12,593) |
| Cash and cash equivalents at beginning of period |
| 4,449 | 17,042 | 17,042 |
| Cash and cash equivalents at end of period |
| 9,343 | 6,771 | 4,449 |
Notes to the unaudited interim results
For the six months ended 31 December 2009
1. Company details
WYG plc is incorporated and domiciled in England, the address of its registered office is Arndale Court, Headingley, Leeds, LS6 2UJ. The company is listed on AIM.
The principal activity of the Group in the period under review was that of international multi-skilled consultant. The Group's revenue derives from activities in Great Britain, Ireland and the Group's International Business Unit.
In the financial statements for the year ended 30 June 2009, information was given on the then proposed restructuring intended to re-balance the Group's capital structure and reduce the level of net borrowings. The restructuring was completed on 8 January 2010. It comprised:
·; the conversion of £22.9m of debt held by the lenders in exchange for 29,993,441 post-consolidation new ordinary shares
·; the conversion of £30m of additional debt held by the lenders in return for 27.6m 'A' preference shares with a nominal value of £27.6m and 2.4m 'B' preference shares with a nominal value of £2.4m
·; refinanced lending facilities totalling £58.25m comprising £50m of term debt and £8.25m of working capital facilities. In addition €38m of committed bonding facilities provided by the lenders.
2. Basis of preparation
This condensed consolidated interim financial information for the six months ended 31 December 2009 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2009, which are available on the Company's website at www.wyg.com, and have been prepared in accordance with IFRSs as adopted by the European Union.
This condensed consolidated interim financial information was approved for issue on 25 February 2010.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2009 were approved by the Board of directors on 30 October 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, but did contain an emphasis of matter relating to going concern and did not contain any statement under Section 498 of the companies Act 2006.
The condensed consolidated interim financial information has neither been reviewed nor audited.
Following the completion of the restructuring arrangement on 8 January 2010, the material uncertainties described on page 69 of the WYG plc Annual Report for the year ended 30 June 2009 are no longer relevant. Consequently the directors consider it appropriate to continue to adopt the going concern basis in preparing financial statements. A pro forma balance sheet has been prepared in note 21 that shows the impact of the refinancing had it occurred at 31 December 2009.
3. Accounting policies
Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2009, as described in those annual financial statements.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected annual earnings.
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 July 2009.
·; IAS 1 (revised), 'Presentation of financial statements'. The most significant change within IAS 1 (revised) is the requirement to produce a statement of comprehensive income setting out all items of income and expense relating to non-owner changes in equity. There is a choice between presenting comprehensive income in one statement or in two statements comprising an income statement and a separate statement of comprehensive income. The group has elected to present comprehensive income in two statements. In addition, IAS 1 (revised) requires the statement of changes in shareholders' equity to be presented as a primary statement. The other revisions to IAS 1 have not had a significant impact on the presentation of the group's financial information.
·; IFRS 8 'Operating segments'. IFRS 8 replaces IAS 14, 'Segment reporting' and requires the disclosure of segment information on the same basis as the management information provided to the chief operating decision-maker. This standard was early adopted in the previous financial year. The adoption of this standard has not resulted in a change in the group's reportable segments.
·; IFRS3 (revised): 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures', effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.
·; IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the group, as it has not made any non-cash distributions.
·; IFRIC 18, 'Transfers of assets from customers', effective for transfers of assets received on or after 1 July 2009. This is not relevant to the group, as it has not received any assets from customers.
The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial period beginning 1 July 2009, but are not currently relevant for the group.
·; IFRIC 13, 'Customer loyalty programmes'.
·; IFRIC 15, 'Agreements for the construction of real estate'.
·; IFRIC 16, 'Hedges of a net investment in a foreign operation'.
·; IAS 39 (amendment), 'Financial instruments: recognition and measurement'.
The various other minor amendments to existing standards have no impact on the Group results at 31 December 2009.
4. Segmental information
IFRS 8 requires segment reporting to be based on the internal financial information reported to the chief operating decision maker. The group's chief operating decision maker is deemed to be the Executive Committee comprising Paul Hamer (Chief Executive Officer), David Wilton (Group Finance Director), Graham Olver (Group Services Director and Company Secretary), Liz Zukowski (HR Director) and the managing directors of the Business Units: Neil Parison (International), Ray Moore (Ireland), David Crichton-Miller (EPT) and Clive Anderson (Management Services). Its primary responsibility is to manage the Group's day to day operations and analyse trading performance. The group's segments are detailed below and are those segments reported in the Group's management accounts used by the Executive Committee as the primary means for analysing trading performance. The Executive Committee assesses profit performance using profit before tax measured on a basis consistent with the disclosure in the group accounts.
The Group's operations are managed and reported by Business Units (BUs) as follows:
Engineering, Management Services and Environment Planning Transport are skill based, operate mainly in Great Britain and address a range of different markets and clients. There is no material reliance on specific clients or on types of project and the BUs are actively encouraged to make best use of their own skills while actively promoting, where applicable, the other skills within WYG, thereby maximising the opportunity to cross-sell.
The BU in Ireland, which covers both Northern Ireland and the Republic of Ireland, is set up to provide clients with skills in Engineering, Management Services and Environment, Planning and Transport. In effect, it replicates the organisational structure in Great Britain.
The International BU was originally established on the back of socio-economic service demand from major clients such as the EU, World Bank and the UK Department for International Development. It has established in-country operations in Poland, Russia, Romania, Bulgaria, Turkey, Abu-Dhabi, Kazakhstan and South Africa and, in addition to its traditional socio-economic service, now provides technical services into those markets utilising the skills available across the rest of the WYG business.
Segment consolidation is based on the same accounting principles as for the Group as a whole. Inter-segment sales are charged at prevailing market prices. The segment results for the six months ended 31 December 2009 are as follows:
|
| Engineering | Management Services | Environment Planning Transport | Ireland | International | Group |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Revenue |
|
|
|
|
|
|
| External sales | 28,991 | 12,917 | 23,132 | 18,135 | 32,516 | 115,691 |
| Inter-segment sales | (67) | - | (13) | (427) | - | (507) |
| Total revenue | 28,924 | 12,917 | 23,119 | 17,708 | 32,516 | 115,184 |
|
|
|
|
|
|
|
|
| Result |
|
|
|
|
|
|
| Operating profit before other items | 149 | 585 | 1,221 | 409 | 1,158 | 3,522 |
| Exceptional and other items (Note 6) | (432) | (161) | (653) | (915) | (92) | (2,253) |
| Operating profit/(loss) | (283) | 424 | 568 | (506) | 1,066 | 1,269 |
| Finance costs |
|
|
|
|
| (5,822) |
| Loss before tax |
|
|
|
|
| (4,553) |
| Tax |
|
|
|
|
| (521) |
| Loss attributable to equity shareholders |
|
|
|
|
| (5,074) |
4. Segmental information (continued)
The segmental results for the six months ended 31 December 2008 are as follows:
|
| Engineering | Management Services | Environment Planning Transport | Ireland | International | Group |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Revenue |
|
|
|
|
|
|
| External sales | 44,772 | 16,143 | 29,232 | 30,593 | 24,751 | 145,491 |
| Inter-segment sales | (245) | (58) | (14) | (723) | - | (1,040) |
| Total revenue | 44,527 | 16,085 | 29,218 | 29,870 | 24,751 | 144,451 |
|
|
|
|
|
|
|
|
| Result |
|
|
|
|
|
|
| Operating profit before other items | 2,081 | 2,080 | 3,999 | 3,698 | 210 | 12,068 |
| Exceptional and other items (Note 6) | (2,717) | (757) | (1,021) | (5,131) | (1,509) | (11,135) |
| Operating profit/(loss) | (636) | 1,323 | 2,978 | (1,433) | (1,299) | 933 |
| Finance costs |
|
|
|
|
| (3,027) |
| Loss before tax |
|
|
|
|
| (2,094) |
| Tax |
|
|
|
|
| 140 |
| Loss attributable to equity shareholders |
|
|
|
|
| (1,954) |
| Total assets |
|
|
|
|
|
|
| 31 December 2009 | 26,855 | 24,412 | 48,287 | 38,831 | 43,662 | 182,047 |
| 31 December 2008 | 52,003 | 29,606 | 56,777 | 94,737 | 58,076 | 291,199 |
| 30 June 2009 | 27,673 | 24,531 | 48,023 | 42,701 | 43,498 | 186,426 |
4. Segmental information (continued)
Reportable segment assets are reconciled to total assets as follows:
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| £'000 | £'000 | £'000 |
| Reportable segment assets | 182,047 | 291,199 | 186,426 |
| Cash and cash equivalents | 6,362 | 10,061 | 4,808 |
| Taxation | 464 | - | 464 |
| Deferred tax | 142 | - | 142 |
| Derivative financial instruments | 13 | 45 | 13 |
| Total assets | 189,028 | 301,305 | 191,853 |
5. Finance costs
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| £'000 | £'000 | £'000 |
| Interest on bank loans, guarantees and overdrafts | 5,596 | 2,739 | 4,731 |
| Interest on obligations under finance leases | 26 | 85 | 138 |
| Interest on loan notes | - | 3 | 3 |
| Interest on defined benefit scheme liabilities | 200 | 200 | 370 |
| Total finance costs | 5,822 | 3,027 | 5,242 |
Included in interest on bank loans, guarantees and overdrafts in the six months to 31 December 2009 is £3.9m of exceptional transaction costs (see note 6).
6. Exceptional and other items
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| £'000 | £'000 | £'000 |
| - Employee termination costs | 1,200 | 1,566 | 8,968 |
| - Office closure costs | - | - | 20,602 |
| - Work in progress and trade receivables provisions | - | 8,000 | 20,547 |
| - Professional indemnity claim provisions | - | - | 5,650 |
| - Professional fees | - | - | 3,440 |
| - Impairment of goodwill | - | - | 77,184 |
| - Other restructuring costs | 227 | 268 | 2,013 |
| - Finance costs | 3,936 | - | 374 |
| Exceptional items | 5,363 | 9,834 | 138,778 |
| Amortisation of acquired intangibles | 826 | 1,301 | 2,230 |
| Total exceptional and other items | 6,189 | 11,135 | 141,008 |
Notes:
WYG incurred exceptional costs in the six months ended 31 December 2009.
The employee termination costs relate to the ongoing review of headcount across the Group. The Board has implemented measures to reduce headcount. These headcount reductions have been across the entire Group, but concentrated in the Engineering and Irish Business Units.
WYG announced the closure of 17 regional offices in the UK and Republic of Ireland. At June 2009 a provision of £17.2m was made as an exceptional cost in respect of vacant leasehold charges primarily made up of rent, rates and service charges payable by the Group over the remaining lease terms on vacated properties. In addition, the Group provided £0.7m in respect of on-going cost obligations in closed locations and £2.7m for asset write offs. No further provision was made in the six months to 31 December 2009.
When the half year results were announced on 25 February 2009, the Group reported an exceptional charge of £8m in respect of a provision against work in progress and trade receivables following a review of such balances. At the year end a further review was undertaken as part of the overall review of the Business Unit balance sheets and the Board considered it necessary to provide a further £12.5m in respect of such balances. No further provision was made in the six months to 31 December 2009.
The Group's professional indemnity claim provision has been assessed on the likely scale of settlement payable by the Group. The amounts classified as exceptional items include those costs that cover the insurance deductible payable on all outstanding claims. No further provision was made in the six months to 31 December 2009.
The Group has incurred in the year to June 2009 significant professional costs in connection with the refinancing.
In the six months to December 2009, £3.9m of finance costs were incurred in connection with the refinancing agreement.
6. Exceptional and other items (continued)
At June 2009, the Group reviewed the value of the goodwill arising upon past acquisitions carried on its balance sheets. Following this review, the Group reduced the value of goodwill carried on the balance sheet in respect of all the Business Units.
'Other items' which are recurring in nature but which warrant separate disclosure represent the amortisation of acquired intangibles. In the prior year 'other items' represented amortisation of acquired intangibles and research and development tax credits relating to prior years.
7. Tax
The tax charge for the period has been calculated by applying the directors' best estimate of the effective tax rate for the year with consideration to the geographic location of the profits, to the profit before tax for the period.
8. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| £'000 | £'000 | £'000 |
| Earnings for the purposes of basic and diluted earnings per share being loss for the year | (5,074) | (1,954) | (128,342) |
| Adjustment relating to exceptional and other items | 6,106 | 8,609 | 137,542 |
| Earnings for the purposes of basic and diluted adjusted earnings per share | 1,032 | 6,655 | 9,200 |
8. Earnings per share (continued)
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| Number | Number | Number |
| Number of shares |
|
|
|
| Weighted average number of shares for basic earnings per share | 52,964,456 | 51,800,522 | 52,169,867 |
| Effect of dilutive potential ordinary shares: |
|
|
|
| Share options | - | 12,940 | (92,318) |
| Weighted average number of shares for diluted earnings per share | 52,964,456 | 51,813,462 | 52,077,549 |
|
|
|
|
|
| Loss per share |
|
|
|
| Basic | (9.6p) | (3.8p) | (246.0p) |
| Diluted | (9.6p) | (3.8p) | (246.4p) |
|
|
|
|
|
| Adjusted earnings per share |
|
|
|
| Basic | 2.0p | 12.8p | 17.6p |
| Diluted | 2.0p | 12.8p | 17.7p |
9. Dividends
No dividend was proposed or paid in the six months to 31 December 2009 (2008: £3.3m).
10. Goodwill
|
| £'000 |
| Cost |
|
| At 1 July 2008 | 115,625 |
| Exchange differences | 7,581 |
| At 31 December 2008 | 123,206 |
|
|
|
| At 1 July 2009 | 120,656 |
| Exchange differences | 827 |
| At 31 December 2009 | 121,483 |
|
|
|
| Accumulated impairment losses |
|
| At 1 July 2008 | - |
| At 1 July 2009 impairment charge | (77,184) |
| At 31 December 2009 | - |
| Accumulated impairment losses at 31 December 2009 | (77,184) |
|
|
|
| Net book value |
|
| At 31 December 2009 | 44,299 |
| At 31 December 2008 | 123,206 |
Goodwill is tested for impairment annually and whenever there are indications that it may have suffered an impairment. Goodwill is considered impaired to the extent that its carrying amount exceeds its recoverable amount, which is the higher of the value in use and the fair value less costs to sell of the CGU to which it is allocated. In the impairment tests of goodwill performed in 2009, the recoverable amount was determined based on the value in use calculations.
Management based the value in use calculations on cash flow forecasts derived from the most recent three year financial plans approved by the Board including certain sensitivities, in which the principal assumptions were those regarding sales growth and changes in direct costs.
Following the review at 31 December 2009, management decided no further impairment was necessary.
11. Property, plant and equipment and intangible assets
|
| Property, plant and equipment | Intangible assets |
|
|
£'000 | £'000 |
| Six months ended 31 December 2008 |
|
|
| Opening net book amount as at 1 July 2008 | 14,517 | 15,203 |
| Additions | 4,362 | 565 |
| Disposals | (498) | - |
| Depreciation and amortisation | (2,084) | (1,877) |
| Exchange differences | 491 | 318 |
| Closing net book amount as at 31 December 2008 | 16,788 | 14,209 |
| Six months ended 31 December 2009 |
|
|
| Opening net book amount as at 1 July 2009 | 13,854 | 12,699 |
| Additions | 1,839 | 54 |
| Disposals | (51) | - |
| Depreciation and amortisation | (1,625) | (1,215) |
| Exchange differences | 104 | 30 |
| Closing net book amount as at 31 December 2009 | 14,121 | 11,568 |
12. Work-in-progress
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| £'000 | £'000 | £'000 |
| Work-in-progress | 50,929 | 56,034 | 55,255 |
| Provision | (9,807) | (5,556) | (14,066) |
| Net work-in-progress | 41,122 | 50,478 | 41,189 |
The value of work in progress comprises the costs incurred on a contract plus an appropriate proportion of overheads and attributable profit. Profit is recognised on a percentage completion basis when the outcome of a contract or project can be reasonably foreseen. Provision is made in full for estimated losses.
13. Trade and other receivables
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| £'000 | £'000 | £'000 |
| Amounts falling due within one year |
|
|
|
| Amounts receivable on contracts | 60,007 | 77,860 | 66,627 |
| Less: provision for impairment of trade receivables | (8,117) | (6,813) | (9,178) |
| Trade receivables - net | 51,890 | 71,047 | 57,449 |
| Prepayments and accrued income | 3,434 | 7,943 | 3,896 |
| Other receivables | 3,034 | 2,240 | 2,731 |
|
| 58,358 | 81,230 | 64,076 |
14. Provisions, liabilities and other charges
|
| Claims | Redundancy | Vacant Leasehold | Total |
|
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
| At 31 December 2008 | 4,065 | - | - | 4,065 |
| Additional provisions | 6,694 | 3,271 | 17,210 | 27,175 |
| Utilised during the period | (1,184) | - | - | (1,184) |
|
|
|
|
|
|
| At 1 July 2009 | 9,575 | 3,271 | 17,210 | 30,056 |
| Additional provisions | 170 | 1,200 | - | 1,370 |
| Utilised during the period | (2,114) | (2,966) | (2,030) | (7,110) |
| At 31 December 2009 | 7,631 | 1,505 | 15,180 | 24,316 |
Professional indemnity claims
Provisions are made for current and estimated obligations in respect of claims made by contractors and the general public relating to accident or other insurable risks as a result of the business activities of the Group. These include claims held by the Group's captive insurance company, Oakdale Insurance Company Limited. In the prior year accounts the provision for professional indemnity claims was presented within accruals as the liability was not considered significant for separate disclosure. However for comparative purposes, the 31 December 2008 provision has been restated in this report.
Redundancy
Provision is made for current estimated future costs of redundancy and ex gratia payments to be made where this has been communicated to those employees concerned.
Vacant properties
The group has a number of vacant leasehold properties, with the majority of the head leases expiring within the next five years. Provision has been made for the residual lease commitments together with other outgoings, after taking into account potential sub-tenant arrangements and assumptions relating to later periods of vacancy.
15. Financial liabilities
|
| Six months ended 31 December 2009 | Six months ended 31 December 2008 | Year ended 30 June 2009 |
|
| £'000 | £'000 | £'000 |
| Current |
|
|
|
| Bank overdrafts | 5,460 | 4,459 | 6,447 |
| Obligations under finance leases | 556 | 964 | 851 |
|
| 6,016 | 5,423 | 7,298 |
| Non-current |
|
|
|
| Bank loans | 99,455 | 96,476 | 88,485 |
| Obligations under finance leases | 301 | 854 | 461 |
|
| 99,756 | 97,330 | 88,946 |
|
|
|
|
|
| Financial liabilities are repayable as follows: |
|
|
|
| On demand or within one year | 6,016 | 5,423 | 7,298 |
| In the second year | 301 | 673 | 431 |
| In the third to fifth years inclusive | 99,455 | 96,657 | 88,515 |
|
| 105,772 | 102,753 | 96,244 |
16. Cash generated from operations
|
| Six months ended 31 December | Six months ended 31 December | Year ended 30 June |
|
| 2009 | 2008 | 2009 |
|
| £'000 | £'000 | £'000 |
| Profit/(loss) from operations | 1,269 | 933 | (123,654) |
| Adjustments for: |
|
|
|
| Depreciation of property, plant and equipment | 1,625 | 2,084 | 6,977 |
| Amortisation of intangible assets | 1,215 | 1,877 | 3,529 |
| Loss on disposal of property, plant and equipment | 25 | 18 | 201 |
| Share options charge/(credit) | 75 | (742) | (1,648) |
| Impairment of goodwill/investments | - | - | 77,184 |
| Operating cash flows before movements in working capital | 4,209 | 4,170 | (37,411) |
| Decrease/(increase) in inventories | 499 | 2,489 | 8,818 |
| Decrease/(increase) in receivables | 6,196 | 5,890 | 22,267 |
| (Decrease)/increase in payables | (11,448) | (9,349) | 18,780 |
| Cash (used in)/generated from operations | (544) | 3,200 | 12,454 |
17. Analysis of net debt
|
| At 1 July 2008 | Cash flows | Other non-cash items | At 31 December 2008 |
|
| £'000 | £'000 | £'000 | £'000 |
| Cash and cash equivalents | 17,427 | (8,520) | 2,323 | 11,230 |
| Bank overdrafts | (385) | (4,074) | - | (4,459) |
| Bank loans due after one year | (82,592) | (2,034) | (11,850) | (96,476) |
| Loan notes due within one year | (240) | 240 | - | - |
| Finance leases and hire purchase contracts | (2,413) | 1,054 | (459) | (1,818) |
|
| (68,203) | (13,334) | (9,986) | (91,523) |
| Add back cash in restricted access accounts | (3,412) | 486 | - | (2,926) |
|
| (71,615) | (12,848) | (9,986) | (94,449) |
|
| At 1 July 2009 | Cash flows | Other non-cash items | At 31 December 2009 |
|
| £'000 | £'000 | £'000 | £'000 |
| Cash and cash equivalents | 10,896 | 3,907 | - | 14,803 |
| Bank overdrafts | (6,447) | 987 | - | (5,460) |
| Bank loans due after one year | (88,485) | (9,981) | (989) | (99,455) |
| Finance leases and hire purchase contracts | (1,312) | 455 | - | (857) |
|
| (85,348) | (4,632) | (989) | (90,969) |
| Add back cash in restricted access accounts | (3,360) | 652 | - | (2,708) |
|
| (88,708) | (3,980) | (989) | (93,677) |
The net debt has been restated to show the Oakdale and restricted WYG International balances.
Other non-cash movements represent currency exchange differences and finance lease creditor movements.
18. Related party transactions
There have been no changes in the nature of related party transactions as described in the 2009 Annual Report and Accounts and there have been no new related party transactions which have had a material effect on the financial position or performance of the group in the period to 31 December 2009.
19. Contingent liabilities and guarantees.
The Company and its subsidiary undertakings cross guarantee to the Group's principal bankers the overdrafts, if any, of each Company covered by the guarantee. At 31 December 2009 the Group's overdrafts amounted to £5,460,000 (2008: £4,459,000).
20. Seasonality
The trading activities of the Group are subject to seasonal fluctuations where both August and December are normally months with relatively low activity levels in the UK due to holiday periods.
21. Events occurring after the reporting period
Since the balance sheet date, the group has agreed capital restructuring with its lenders. Further details of this are given in note 1. There have been no other significant events since the balance sheet date.
The impact of the capital restructuring is reflected in the pro forma balance sheet as follows:
|
| As at 31 December 2009 | Adjustments | Proforma as at 31 December 2009 |
|
| £'000 | £'000 | £'000 |
|
|
|
|
|
| Non-current assets | 70,276 | - | 70,276 |
| Current assets |
|
|
|
| Work in progress | 41,122 | - | 41,122 |
| Trade and other receivables | 58,358 | - | 58,358 |
| Tax recoverable | 4,469 | - | 4,469 |
| Cash and cash equivalents | 14,803 | - | 14,803 |
|
| 118,752 | - | 118,752 |
| Current liabilities |
|
|
|
| Trade and other payables | (71,768) | (2,000) | (73,768) |
| Current tax liabilities | (1,262) | - | (1,262) |
| Financial liabilities | (6,016) | - | (6,016) |
|
| (79,046) | - | (81,046) |
| Net current assets | 39,706 | - | 37,706 |
|
|
|
|
|
| Non-current liabilities | (131,662) | 52,890 | (78,772) |
| Net assets/(liabilities) | (21,680) | 50,890 | 29,210 |
|
|
|
|
|
The pro-forma balance sheet above, shows the impact on the balance sheet of the capital restructuring as if this had occurred at 31 December 2009. The actual date of the restructuring was 8 January 2010. The adjustments represent the value of debt that was exchanged for equity and an accrual for further costs payable on completion of the transaction.
22. Availability of interim report
The Interim Report will be posted to shareholders in due course and copies 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
The directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
·; an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
·; material related party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The directors of WYG plc are listed in the WYG plc Annual Report for 30 June 2009, with the exception of the following changes in the period: Non executive director Mr John Richardson retired on 31 January 2010, and Mr David Jeffcoat was appointed on 16 December 2009 as Non executive director and Chairman of the Audit Committee. A list of current directors is maintained on the WYG website: www.wyg.com.
D Wilton
25 February 2010
Finance Director