Shares in consultant White Young Green fell by more than 30% today on the announcement of its interim results, despite shedding 235 staff, as it admitted it could breach one of its banking covenants.
White Young Green’s order book fell by 6%, and debt rose by £20M to £91.5M while adjusted pre-tax profits was flat at £9M over the six months to December 2008.
The high debt level is on the back of a spending spree throughout 2008 and 2007, culminating in the purchase of Irish consultant P H McCarthy for £15M in October 2007.
Chief executive Lawrie Haynes resigned in January and market analysts have predicted a rocky future for the consultant.
In a downbeat assessment of the company’s performance over the past six months, chairman Peter Wood said:
“As a result of the increasingly challenging market conditions, whilst the Group has headroom in its committed banking facilities, there is a risk that the Group may breach one of its covenants under its existing banking facilities later this year.
“The Group’s lenders have been informed of these circumstances and discussions with them regarding a remedy of a potential breach have commenced. The Group recognises that, even before this point, the level of debt within the Group has been a key concern for investors,” he said.
The company was strong in environmental, planning and transport sectors, showing growth of 13%, but flat in both engineering and management services with growth of 2% and 1% respectively. The company performed weakly internationally, contracting by 6%.
As a result of the increasingly challenging market conditions, whilst the Group has headroom in its committed banking facilities, there is a risk that the Group may breach one of its covenants under its existing banking facilities later this year
White Young Green chairman Peter Wood
Growth in Ireland appears to be very strong - up 32% - but this was entirely due to the acquisition of P H McCarthy. Wood said the Irish market was deteriorating: “resulting in difficult trading conditions with pressure on both margins and fee earning opportunities
According to market analysts contacted by NCE, the consultant could shed up to a further 550 staff - bringing the total up to 25% of its workforce, closing up to 14 regional offices by the end of the year.
White Young Green’s share price dropped to a new low of 31p today, more than 31% down on the day and more than 91% down on the year.