WYG plc Acquires Alliance Environment
WYG plc ("WYG" or the "Group"), the global programme, project management and technical consultancy, today announces the acquisition of Alliance Environment and Planning Limited ("Alliance Planning") and provides an update on trading for the six month period ending 30th September 2014. The Group's Annual General Meeting takes place on 23rd September 2014 and its half year results are expected to be announced on 2nd December 2014.
Acquisition of Alliance Planning
On 10th September 2014 WYG acquired the entire issued share capital of Alliance Planning for cash consideration of £3,200,000, creating one of the largest planning businesses in the UK.
The acquisition is in line with WYG's strategy of growing quality revenues both organically and through selective acquisitions, particularly in its strategic front-end client offering. The acquisition will be immediately earnings enhancing for WYG. For the year ended 31 July 2013, Alliance Planning reported turnover of £2.7 million and profit before taxation (and before the remuneration of its owner-directors) of £538,614. Net assets of Alliance Planning at that date were £785,850.
Alliance Planning is one of the U.K.'s fastest-growing independent planning consultancies providing planning advice on every aspect of development from the historic environment and natural resources to master planning and high density urban living. Established in 1996, headquartered in Guildford and with offices in London, Birmingham and the East of England, Alliance Planning has grown rapidly since then, securing clients including Frasers Property, Henry Boot, Persimmon Homes, Telereal Trillium and a number of housing associations, city and county councils.
50% of the consideration for the acquisition is payable in cash on completion with the balance due on the anniversary of completion.
In June, we highlighted that our key measure of success this year would be an increasing level of order intake which would manifest itself in a growing order book and a progressive increase in revenue and profitability.
As we approach the half year we are delighted to confirm that the order book reported at 31 March 2014 of £86.8m has increased by 10% and currently stands at £95.5m. A buoyant UK market is being supplemented by an increasing number of opportunities in Europe following the finalisation of the European budget, enabling funds to be released to the key development agencies responsible for projects in our core markets. Furthermore, our initiative to diversify into other international development agencies is creating opportunities of scale that could transform that part of the business.
Significant wins in the half year include the award of a place on the MOD's four year Principal Support Provider framework for services to the Defence Infrastructure Organisation and, in a consortium with COWI, a three year contract with the European Investment Bank to provide technical assistance to the Infrastructure Projects Facility in the Western Balkans. In Turkey we have won a €6.9m project to provide technical assistance to increase the employability of disadvantaged people and a €2.4m project to assist with the recruitment of future blood donors, both projects are due to be completed within the next two years.
In addition, we have achieved the following which are currently not accounted for within the order book:
- on 3rd June 2014, we announced a major contract win in Libya, to provide improved security, justice and defence to its citizens, which is worth up to £28m over 34 months. We have now successfully completed the initial inception report and whilst we are working with our partner, Cardno, and our client (the UK's Department for International Development) to develop and scope the next phase, we are currently recognising no value for this project in the stated order book, in line with our usual conservative approach.
- on 17th July 2014, we announced that we have been appointed as a key strategic partner in a consortium led by AMEC plc that is the preferred bidder to support the development of Poland's first nuclear power plant. Although the contract, which is expected to be confirmed shortly, will be worth a minimum of £6.2m to WYG during its initial phases, potentially rising to up to £35 million over 10 years, no value will be recorded in our order book until the contract is concluded.
As we mobilise on a number of large scale projects, we are seeing a temporary increase in working capital, hence cash balances at the half year will be lower than at 30 September 2013. However, we are confident that this is a timing issue and that our cash balances will recover in the second half.
Notwithstanding the acquisition of Alliance Planning, we also continue to look at a range of opportunities to invest organically and through selective, niche acquisitions made possible by the Group's improving profit and strong cash management.
We now expect that revenue in the first half of the year will be in line with the corresponding period last year and, given these positive developments, we anticipate that revenue will begin to accelerate in the second half, leading to an improvement on the comparable period for the prior year.
Operating profit at the half year is expected to be more than 10% higher than the corresponding period last year and, on the basis of the developments described above, we anticipate that operating profit for the full year will be modestly ahead of current market consensus figure of £5.25m.
Transformation Incentive Plan
On 10th September 2014 the Board authorised the allotment of 1,783,858 new ordinary shares to enable the exercise of 2,020,845 options under the Company's Transformation Incentive Plan ("TIP"). To mitigate some of the dilutive impact of the exercise of the options under the TIP, 236,987 of the options were satisfied by the issue of shares already held by the Employee Benefit Trust. Therefore, the total number of ordinary shares and the total number of voting rights over ordinary shares as at the date of this announcement is 66,489,655.
Application has been made for the new ordinary shares to be admitted to trading on AIM. It is expected that admission will become effective and dealings will commence on 16th September 2014.
Paul Hamer, Chief Executive Officer of WYG plc, said:
"We are delighted to be joined by Steve Fidgett, Gerald Sweeney, Andy Stallan and the team from Alliance Planning. We believe that they will be an excellent fit with WYG, significantly boosting our planning and asset creation capability. With approximately 100 planning specialists, WYG now has one of the largest teams in the UK. We are also increasingly able to use these specialist skills in support of our international business as they help to develop infrastructure related to population expansion and urbanisation."
"This acquisition, together with recently announced major project wins, represents a further significant step in WYG's growth journey."
"We have enjoyed a very positive start to the year. In the UK, we have retained or won the overwhelming majority of the key framework agreements that we have bid for, which will sustain a substantial proportion of our expected activity over the next 2 to 3 years. We have also won a number of important new international contracts, significantly improved our order book and pipeline, and further strengthened our business through acquisition and other investments."
"In recognition of the continued momentum and positive outlook, we will be seeking shareholder approval at our upcoming AGM, to resume dividend payments which reiterates our confidence in WYG's financial position, prospects and profitability."