Engineering consultancy and services business, Scott Wilson, is seeing some stability return to its markets, although management remains pessimistic about the state of UK public infrastructure spending - especially with the hiatus effect of a general election next year. Indeed, chairman Geoff French says that internal plans assume no growth in the the UK this year or next.
Scott Wilson's main problems are centred on its core UK market, which is most exposed to government spending and which generates over 60 per cent of the company's sales. The building and infrastructure division was hit hardest by the downturn in commercial building and the subsequent fierce price competition for new tenders. Consequently, that unit's sales tumbled from £42.2m to £28.5m with profits down to just £0.7m from £3.9m. Government stimulus spending did better for the roads division where sales grew slightly to £34.7m from £32.3m last time, and profits rose to £4.4.m compared with £2.7m. Meanwhile, at the international side, its Dubai-related worries and uncertainty over project deferrals that's the thorn in the group's side. And while Middle East sales, at £6.6m, are small compared to total group sales, project deferrals, delays and cancellations meant a £0.7m loss for that region.
Broker Altium Securities expects a pre-tax profit for 2010 of £18m, with EPS of 16.3p (2009:£22m, EPS 9.9p).
SCOTT WILSON (SWG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 122p | MARKET VALUE: | £ 89.1m | |
| TOUCH: | 120-125p | 12-MONTH HIGH: | 134p | LOW: 37p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 59p* | NET DEBT: | 39% | |
| Half-year to 1 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2008 | 173 | 9.20 | 8.51 | 1.33 |
| 2009 | 159 | 9.86 | 9.63 | 1.33 |
| % change | -8 | +7 | +13 | - |
Ex-div:20 Jan Payment:19 Feb *Includes intangible assets of £56m, or 77p a share | ||||
