Industry consultancy WYG has issued a profit warning to shareholders after undertaking a review of the business.

While revenue for the current year is still expected to exceed £160 million, the Board said it expects operating profit for the half year will be "significantly lower" than the prior year.

In a trading update, the Board said: "Our International Development business announced major project wins in January and June 2017 and it was our expectation that these would mobilise quickly leading to a significant increase in revenue and profit during the early part of the financial year.

"However, two major projects have taken longer to start than we anticipated. In Turkey, we now expect a lull in activity around the calendar year-end during the transition between the first and second phases of the IPA funding programmes.

"We are seeing delays in the onset of new work under phase two and this is exacerbated by delays to the signing off of work and receipt of some milestone payments for projects closing out under phase one."


The Group continued: "Having undertaken a review of the major contracts within our Consultancy Services business we have concluded that a small number of engineering contracts are likely to deliver lower profitability than originally forecast. This has been further compounded by lower than anticipated volumes under certain framework contracts, though activity on these is now starting to flow through.

"Due to our Planning and Transport Planning practices performing below expectations in the early months of the year, we now expect operating profit from this core area of activity to be significantly below budget."

WYG added its real estate business, which the company purchased in October 2015, has also "performed well below budget in recent months".

"We no longer expect this business to achieve its budgeted profit target, although this will also mean that we are likely to pay less deferred consideration than originally projected," the company said.

"Performance in all these business units is expected to show some recovery in the second half."

Douglas McCormick, new Chief Executive Officer of WYG, said despite the revised expectations he firmly believes the underlying business "is a sound platform from which to grow in the medium term".

"Having joined the business at the beginning of June and undertaken a thorough review of the budget and current trading, the Board and I consider it appropriate to revise expectations as we are announcing today," he said.

"The impact of the first quarter, largely from slow trading, together with some legacy issues make this both prudent and necessary. I have visited some 20 of our offices and spoken with several hundred of our staff in my first three months and I am firmly of the view that the underlying business is a sound platform from which to grow in the medium term."

(LM)