SWG business ahead of plan

Consultancy group's first set of results following flotation reveal a pre-tax profit of £21m, including a one-off £11m supplement.

Scott Wilson Group has unveiled its first set of financial results since floating on the Stock Exchange in March. The consultancy group's orderbook is shown to be at a record level, operating margins are heading towards 6% and the business is "ahead of its strategic plan".

Geoff French, chairman, said: "We floated because when we looked at where we stood in the various listings, rival consultants who had overtaken us were always those players who had become a plc. The move enabled them to grow faster by making acquisitions.

"WS Atkins was always up there, but RPS and Mouchel Parkman both climbed… and likewise WSP, which is the classic case that proves the point."

SWG's latest financial results (12 months to 30 April 2006) show turnover higher at £200m (£170m). Pre-tax profit came in at £21m (£7m), though the latest figure would have been £10m had it not been for one-off items worth a further £11m - largely gains on changes to the deferred benefit pensions schemes.

Prior to the float, SWG had been saddled with three major financial burdens: it had historic liabilities dating back to the days when it operated as a partnership; bank debt; and a pension fund deficit. Money from the flotation has cleared these issues away.

"We are cleaner and in a better shape to move forward," said French. "We have made a few small acquisitions. The medium-term aspiration is to grow organically at 10% a year, lift our operating margins and make selective acquisitions."

While SWG has five operating divisions, the transport sector accounts for 63% of its group turnover. The future plan is to make acquisitions that will improve its presence in other sectors: property, environment and natural resources.

The flotation raised £68m net. The bulk of this was used to top up the pension scheme (£23m), settle historic liabilities (£13m) and repay bank debt (£12m). From the balance, £14m was earmarked as additional working capital.

In the pension scheme, mortality assumptions had changed to reflect longer life expectancy, resulting in an extra cost of £6m. Despite this, the overall deficit at the end of April had been trimmed back to £34m (£49m) and since the financial year-end, SWG has made a further cash injection, reducing the deficit to £17m currently.

[Contract Journal, 26 July 2006, p. 8]