WYG boss: Looking beyond restructuring to foreign growth
WYG’s chief executive is looking to ‘leave the restructuring story behind’ as his consultancy closes in on a target of cutting UK and Ireland revenue by 50 per cent.
All the latest contract wins, market trends and information on the CNinsight 100 contractors in one interactive database.
Paul Hamer spoke to CN shortly before WYG announced plans to place its Republic of Ireland business into liquidation, resulting in 50 job losses.
The liquidation follows an “inordinate amount of restructuring”, according to Mr Hamer, which has seen staff numbers cut from 3,700 to 1,450 between 2008 and 2012, 50 office closures and a reduction in service offerings from 26 to seven.
The group blamed the Irish closure on “unsustainable property costs, and the legacy of claims” linked to a long string of acquisitions: the business was built up through a series of 12 purchases between 1999 and 2008. WYG stressed there are no further closures planned.
WYG, formerly known as White Young Green, had embarked on an aggressive expansion programme that resulted in a total of 36 UK acquisitions by 2008 and left it with an £100m debt pile.
Mr Hamer, also the chairman of the Association for Consultancy and Engineering, told CN: “Everybody’s talked about what we have done and where we have been – we are far more keen to get the message out the restructure is complete.”
He added: “People are much more interested in WYG than they were even 12 months ago. It’s a completely different dynamic.
“The restructuring programme that we have been on is finished. We are now willing to be judged on what we deliver in the future.”
Mr Hamer said the focus of the “new WYG” is on a return to operating profitability after the consultancy posted an operating loss of £3.5 million on £139m of revenue in the year to 31 March 2012.
In 2008, 98 per cent of its work was in the UK and Ireland. UK revenue now stands at 56 per cent, and by the end of the 2013/14 financial year Mr Hamer forecast this would reach 50 per cent. Eastern Europe now provides 32 per cent of revenue.
UK & Ireland – 56%
Eastern Europe – 32%
Middle East and North Africa – 11%
Rest of the world – 1%
The firm’s debt has been wiped out through two capital restructurings, while the company has also moved away from high-risk design work, which previously led to claims costing from £6m to £10m each year and costly premiums.
A move from recovery to growth will partly be achieved through strategic partnerships, which make up about 15 per cent of WYG’s revenue at present, said Mr Hamer.
Speaking after the merger between WSP and Canadian firm Genivar, he said: “We are fiercely independent and we believe that there’s a market where a consultancy of our size can operate and be very successful against the larger consultancies.
“But also we recognise our weaknesses and work with, partner, collaborate with many of our competitors to make sure we can bring total value to our clients.
“There is this business dynamic where your competitors on Monday are your partners on Tuesday.
“I can imagine going forward that 20 to 25 per cent of the group’s overall revenue will come where we win projects with others.”
But he added: “These businesses are buying UK consultancies because they’re world class at what they do. You could reasonably expect further consolidation would take place in the sector.”
Some of the main markets for WYG include defence, transport, energy and waste, nuclear decommissioning and urban and commercial development.
Mr Hamer said it is prequalifying for 92 per cent of projects with a 44 per cent strike rate on the final selection.
“That tells us we have got the focus right,” he said.
“Actually being small has many advantages; it makes us agile and dynamic, the decision process takes hours not weeks or months,” he added.
Cities over countries
Mr Hamer said businesses and investors are looking at cities for revenue rather than countries.
“It’s all about which are the top 10 cities rather than which are the top 10 countries.
“London tends to be the first place people invest. When you look at infrastructure, you have to think about the infrastructure that London needs for business against some of the emerging cities and the infrastructure they are putting in place.
“I think that’s where the government’s focus should be and probably is.”