Government spend on projects from climate change to the EU’s enlargement drive helped drive WYG’s (WYG:AIM) order book 18% higher to £123.4 million in the last six months.
Chief executive Paul Hamer, speaking after half year results, says the Leeds-based firm is targeting a pre-tax profit of £18 million by 2018 as delayed European spend starts to flow through.
‘The bottleneck appears to have been cleared,’ says Hamer.
‘When you look at how the European business performed in the period it has been flat but when you look at the order book you can see it will gather momentum in the second half.'
Overall spend from the EU bloc for development projects is projected to be €15.3 billion (£10.8 billion) over the period 2014 to 2020, Hamer says.
WYG bids for and delivers government socio-economic projects in Turkey and many of the other states in eastern Europe and the Baltic region.
‘Climate resilience’ is another area Hamer is optimistic on. WYG bought North Associates in Cumbria this year, a unit which is part of the low carbon British Energy Coast project.
There are also opportunities in Africa, where the UK government is committed to spending half of the Department for International Development (Dfid) budget on international climate projects, Hamer says.
‘Particularly in Africa, we are bidding on some big projects around climate resilience,’ says Hamer.
‘Our focus on Africa and fragile states generally will bring a big pipeline of opportunity.'
Hamer also commented on the scrapping of a management incentive scheme which would have seen significant shareholder dilution had it been implemented.
Management were entitled to receive 17.9% of WYG’s share capital – worth around £16 million –after delivering on 2010 turnaround targets.
But the package has now been replaced with a less dilutive offer.
‘We are pleased to get overwhelming support for the new incentive scheme,’ Hamer says.
‘The old incentive scheme was providing a significant impediment to shareholder value.
‘It would have seen significant dilution to shareholders and under the new one, if we achieve all of the targets, the dilution is only around 4%.
‘We are delighted we have managed to solve that problem and we hope that with that impediment to value removed we can get rated and priced at what we believe is something appropriate for the future.’
Results for the six months to 30 September 2015 were solid. Revenue declined marginally while profit-before-tax was higher in the first half than in the entire of last year at £2.1 million.
Diluted earnings per share was 3.1p versus a 0.7p loss in the same period last year.
Shares in WYG trade 1.5% lower at 129p.