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Wading out of troubled water

As troubled Welsh utility Hyder prepares to hand over its reins, what fate faces its consulting arm?

Hyder Consulting managing director Tim Wade has a definite spring in his step. Despite the turmoil and takeover frenzy under way at the group's Cardiff headquarters, change represents opportunity, he believes.

'Nomura has no record of micro management,' says Wade, confident that the possible new owner will let him get on with running the business. 'It likes businesses that have strong growth potential and we are one of those.'

The business employs just over 3,000 people and last year turned over fees of £107M, putting it in the NCE Consultants File top ten for just about every field of work.

But even Wade accepts that to the outside world, particularly in the UK, Hyder Consulting has always had an identity problem. Its previous incarnation Acer suffered similarly after it dumped the well known and well respected Freeman Fox name in preference to something higher up the phone book listing.

That said, a name change this far down the line is not an option that Wade would relish. Developing the business can be done just as effectively without such a radical step and, as he points out, outside the UK Hyder is known as a consultant not a Welsh utility. And overseas work last year brought in £68M of turnover.

'We need to make sure that we have the sales and marketing plan in place to continue to generate a workload in excess of our resources,' says Wade. The cutbacks last year, he adds, were driven solely by the fall in water related workload and were by no means a sign that the consultancy was over resourced. He is confident that takeover of the group will only help.

Wade defends Hyder's group problems, which he says are largely down to changing Government attitudes towards the water utilities.

Windfall tax, additional environmental clean-up burden, price capping and investment demands have seen Hyder plc's share price tumble from a £10.50 1998 high to less than £2. In hindsight, purchase of the SWALEC business through debt was not such a good move but then a rights issue on falling stock would not have been particularly appealing to the City either.

Changes in the water business have also had an impact on Hyder Consulting. Less than five years ago the group contributed £30M worth of water related design work to the business.

Today, not only has the workload fallen off but the emphasis has also shifted towards underground renewal work - finding leaks and fixing them, pulling pipe liners and refurbishing existing assets - work more suitably carried out by term contractors. Replacing this workload is Wade's challenge.

'Railtrack has come to life,' he assures, reflecting on the firm's fourfold increase in rail consulting to £8M last year. 'Sadly, it had to be driven by major disaster at Paddington - spending on signalling is now on an upward trend.' Overseas, Wade says the firm also has some lucrative irons in the railway fire which he expects to start delivering soon.

But Wade's background and to a large extent, his passion, is rooted in the Private Finance Initiative. While he accepts that the UK's wealth of experience of such deals now makes them 'just another procurement method', Hyder Investments - the firm's deal making arm - remains close to his heart. This, he believes gives the business a serious advantage for clients.

Having the PLC balance sheet behind deals helps but he is confident the track record speaks volumes: 'Nobody would consider putting together a PFI job in the UK without considering Hyder.'

Regardless of who ends up taking over the Hyder Group, Wade is convinced that the business is safe - providing it delivers.

The key, he says, is to develop Hyder Consulting's people to match the needs of clients. 'Helping clients get more out of the existing assets requires a higher level of consultancy. What we are now doing is managing our CVs - delivering the people to solve client's problems - selling and marketing our intellectual property, based on value not price.'

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