23 March 2017 – trading update
Shares in WYG have fallen sharply this morning following a disappointing trading update. Although revenues for the year ending 31 March 2017 are likely to exceed £150m, representing growth of some 13%, profits are likely to be lower than previously expected. This is largely due to project delays and deferrals with many of these being in the group’s higher margin service lines. The group has also invested in building its UK capacity in anticipation of higher levels of activity which as yet have not materialised. The result of this is that UK profitability is likely to be lower than last year. However, the group’s international operations have performed better than expected and so overall pre-tax profits before exceptional items are expected to be around £8.7m (2016: £7.0m) for adjusted earnings per share of 11.8p (2016: 9.8p). Although these are less than previous expectations the fall in the share price looks overdone and with further growth forecast for the next financial year we re-iterate our recommendation of BUY.