WYG Group PLC (LON:WYG) has done exactly what it said it would do, and for this reason, investors should have every confidence in the company’s prospects, chief executive Douglas McCormick said.
The project management and consultancy group had a challenging first half but results met estimates and the second half is expected to be stronger.
Revenue for the six months ended September 30 remained broadly stable at £75.3mln (H1 17: £76.2mln), although a slight pick-up in margins helped adjusted operating profits edge up to £1.1mln (H1 17: £1.0mln).
WYG has an order book of £169.0mln, of which around £62.0mln is expected to be delivered by the end of the current financial year, compared to the £53.3mln it had left the same time a year ago.
“We’ve done exactly what we said we’d do and we’re on a journey from where we had figures that weren’t working so well to getting better. (There’s) still a bit to go but we’re definitely on track,” McCormick said.
The company took steps to improve the efficiency and profitability of the business in early 2018.
The actions helped to offset some softness in trading in the first half, particularly in its international development business where it had seen delays in opportunities coming to market and a slower ramp-up of activities on certain existing projects, alongside a high level of bidding costs.
WYG is investing in moving its operations to cloud-based systems and digital technologies.
McCormick expects the digital upgrades to be up and running in the next 18 months and said the company is already starting to see a pick-up in productivity from these investments, which will help bring margins towards its long-term 8% target.
Over the next 24 months, the firm is aiming towards becoming cash positive and achieving a 5% net operating profit margin with a "clear road path" to 8%.
McCormick said volatility and Brexit are two risks facing the company in 2019 but believes the group’s diversity across different global markets means it can handle such challenges.
“I think we’re fairly resilient, we run six business units so our eggs are not in a single basket,” he said.
“We have some interesting spread in Africa, in Eastern Europe and in Mainland Europe as well as here in the UK, which remains the key market (77% of the business is done out of the UK, 23% done out of the international sphere).”